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Why Tecnoglass Stock Tanked 40% This Week

By Brett Schafer – Dec 10, 2021 at 3:17PM

Key Points

  • Hindenburg Research released a short report on Tecnoglass this week.
  • The report alleges that Tecnoglass has a relationship with the Cali drug cartel.
  • The stock dropped 40% on the report.

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A prominent short-seller released a report on the company.

What happened

Shares of Tecnoglass (TGLS 3.38%) plummeted 40% this week, according to data from S&P Global Market Intelligence. Well followed short-seller Hindenburg Research released a short report on the company, which was the main reason for the stock dropping this week. 

So what

Tecnoglass runs a fairly simple company. It manufactures and sells window and glass equipment to companies across North and South America. However, according to the Hindenburg Research report, the company and its executives have some history that does not leave them in the best light. 

A person installing a window.

Image source: Getty Images.

For example, in the report, Hindenburg Research claims that Jose and Christian Daes, CEO and chief operating officer of Technoglass, have a relationship with the Cali drug cartel. They also claim that in 2012 and 2013, the Tecnoglass executives set up shell companies in Colombia to rig local Chamber of Commerce elections. If true, these would be very serious charges that could get the executives and Tecnoglass in trouble. 

With these serious allegations and Hindenburg's strong track record of success (this was the research team that exposed the Nikola fraud), it is no surprise that Tecnoglass stock collapsed 40% this week. 

Now what

We don't know for sure yet whether these allegations have merit, but if you're a shareholder in Tecnoglass, it would be smart to read Hindenburg's report to see what information they have on the business. If you think the allegations are meritless, then it could be fine to hold your shares of Tecnoglass stock. But if you think there's a chance the claims are correct, it is probably best to keep your money out of this stock right now. 

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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