Can a stock rise 40,000% in five years? Yes, but only in Turkey

Behind a 40,000% Surge: The Tera Story Raises Questions in Turkey’s Markets

Shares of Tera Yatirim Menkul Degerler AS have surged nearly 40,000% since their 2022 IPO, drawing both investor fascination and regulatory scrutiny. The rally—driven in part by aggressive fund strategies, concentrated holdings, and leverage—has turned the firm into one of Türkiye’s most valuable companies, while raising concerns over market structure, transparency, and potential conflicts of interest.

A Rally That Defies Explanation

What began as a curiosity in Türkiye’s financial circles has evolved into one of the most extraordinary stock market stories in recent memory.

Over the past year, shares of Tera Yatırım delivered repeated triple-digit gains—54%, 108%, 61%, and 73% in rapid succession. Even in a market known for speculative surges, the scale and persistence of the rally surprised investors. Since its December 2022 listing, the stock has climbed nearly 40,000%.

Despite a recent pullback, the company still commands a market value of around $4.5 billion—remarkable for a firm employing roughly 130 people. At times, its valuation has exceeded that of global financial institutions such as Lazard Inc. and BGC Group Inc..

The Fund at the Center of the Surge

At the core of Tera’s business model is its flagship investment vehicle, the Tera Portföy First Mutual Fund. The fund has gained significant traction among retail investors, particularly on social media, after delivering returns exceeding 1,500% over the past year.

Its strategy has been unconventional. Regulatory filings show the fund allocated billions of lira into a tightly connected group of companies, including Tera itself, its subsidiaries, and firms brought public by its brokerage arm. These investments were often amplified through borrowed funds.

At one point, nearly 99% of the fund’s assets were concentrated in Tera shares. The fund also targeted companies with limited free float—stocks with relatively few shares available for public trading—helping drive sharp price movements.

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Structural Concerns and “Self-Reinforcing” Dynamics

According to Orkun Saka, these practices may create layered conflicts of interest and high-risk structural conditions.

He describes a feedback loop in which the fund’s purchases push up affiliated stock prices, inflating net asset values. This, in turn, enhances the perceived value of the fund management business and boosts the parent company’s earnings and share price.

“This loop is self-reinforcing by construction,” Saka noted.

Regulatory Scrutiny Intensifies

The extraordinary gains have attracted the attention of regulators. Turkey’s Capital Markets Board is reportedly considering new rules to limit funds’ exposure to related-party investments and cap concentrated positions.

The proposals are widely seen as targeting strategies similar to those used by Tera.

Authorities have already taken action in certain cases. The regulator fined two of Tera’s fund managers 8.9 million liras each for transactions involving Visne Madencilik Uretim Sanayi ve Ticaret AS, citing the creation of misleading perceptions regarding price and demand.

High Gains, High Risks

Tera classifies its $2.7 billion fund as a high-risk investment suitable for qualified investors with a medium- to long-term horizon.

One striking example of its strategy is its investment in Destek Finans Faktoring AS. After Tera’s brokerage helped take the firm public in 2025, the fund built a position representing 26% of its assets. The stock has since surged more than 4,700%, making it one of the largest companies on Borsa Istanbul.

However, such concentrated positions can also amplify volatility. In another case, shares of Visne Madencilik rose more than 2,100% following its IPO, only to collapse by 89% after Tera exited its position.

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Founder Defends Strategy

Tera’s founder, Emre Tezmen, has rejected criticism of the firm’s approach.

“Everything we do is in line with regulations,” he said in an interview. “We haven’t done anything that hasn’t been done in global markets.”

Tezmen, who owns a 32% stake now valued at approximately $1.4 billion, has also downplayed concerns over market influence, arguing that no participant can fully control stock prices.

Leverage and Market Impact

Financial filings reveal that Tera significantly increased its use of leverage during the rally. Borrowings rose to 59.8 billion liras ($1.3 billion) by the end of 2025, up sharply from just 132 million liras a year earlier.

Such strategies can magnify gains—but also risks—especially in less liquid markets.

Analysts warn that extreme price movements fueled by small free float and heavy retail participation can undermine market confidence. Kamil Dimmich described the phenomenon as “nonsensical squeezes and valuations.”

Broader Implications for Emerging Markets

The Tera case echoes similar episodes in other emerging markets, such as Indonesia, where speculative retail trading has driven unexplained price surges exceeding 1,000%.

Concerns over market integrity have already prompted warnings from MSCI Inc., including the risk of downgrades in market classification.

In Türkiye, officials have acknowledged rising concerns about market manipulation. Treasury and Finance Minister Mehmet Simsek has pledged stronger regulatory oversight, while Capital Markets Board Chairman Omer Gonul has signaled tougher enforcement.

A Rally That Raises More Questions Than Answers

The meteoric rise of Tera Yatırım highlights both the opportunities and vulnerabilities of emerging equity markets.

While the company’s growth has created immense wealth and captured investor attention, it has also exposed structural weaknesses—ranging from concentrated ownership to regulatory gaps—that could have lasting implications.

As regulators move to tighten oversight, the Tera story may ultimately serve as a turning point for market discipline in Türkiye.

Original by Bloomberg, adapted from trnslatiosn in Turkish press