What happened
Shares of Technoglass (TGLS -0.23%) plunged more than 40% by 10:30 p.m. ET on Thursday. Weighing on the glass stock was a damaging report by a noted short-seller.
So what
Short-seller Hindenburg Research published a new report on glass and aluminum products maker Technoglass. The Columbia-based company focuses on selling glass products to residential and commercial building markets. Shares of the company, taken public via a special purpose acquisition company (SPAC) in 2013, have soared this year, fueled by the pandemic-related real estate boom in South Florida, its key U.S. market.
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Hindenburg's report noted that it spent several months reviewing Technoglass' records. It identified serious red flags regarding its management and financial reporting, including several undisclosed related party transactions. It also noted cartel connections between the company's co-founders, brothers Jose and Christian Daes, who currently serve as directors and as the CEO and COO, respectively.
The report detailed several questionable acquisitions and sales to entities owned by family members. Similarly, it found questionable capital expenditures to related party construction companies. Because of this, Hindenburg "strongly suspect(s) Technoglass has faked a significant portion of its revenue."
Now what
The Hindenburg report goes into great detail about its concerns with Technoglass' management team and its reported sales. However, it's worth pointing out that Hindenburg shorted shares of Technoglass before it released its research report, so it's directly profiting off today's decline. Because of that, investors should do their own due diligence in Technoglass before taking a position in this stock.
