Fermi stock is in free fall. Shares of Fermi Inc., ticker FRMI, sank after a key $150 million funding and lease commitment tied to Project Matador collapsed. I confirmed the tenant withdrew on December 11, two days after exclusivity ended on December 9. The move unleashed heavy selling and exposed funding weak spots at this pre‑revenue data‑center REIT.
Stock Hits Air Pockets As $150 Million Anchor Walks
By midafternoon Friday, the stock traded near 9.48. The intraday range stretched from 7.57 to 15.01. That is wild volatility for a new listing. The immediate shock was a roughly 43 percent slide into the 8s as sellers rushed to exit.
The now‑pulled tenant deal mattered. It was designed to backstop both lease cash flows and construction funding for Project Matador, Fermi’s flagship AI‑ready power and data buildout. Without it, the capital stack has a hole. The company is still pre‑revenue. That means it must raise fresh money to build before it can earn rent.
The damage runs deeper than a bad headline. Shares have fallen about 47.6 percent over the last month and roughly 55 percent year to date. The IPO pop in October set expectations high. Today, reality is setting a lower bar.
A lost anchor tenant can force a full redesign of a project’s funding plan, including higher cost capital or equity dilution.
Project Matador, What Still Stands And What Needs Rework
Fermi still holds critical pieces for Matador. It has a definitive electric service agreement with Xcel Energy’s SPS unit for up to 200 megawatts, with 86 megawatts expected to ramp in January 2026. It also has a 20‑year lease for seven GE TM2500 turbines, totaling 157.5 megawatts, slated to go online in early 2026. These are real building blocks.
But they are not enough on their own. The lost tenant was expected to underwrite a large slice of construction capital. Without that backstop, the path shifts. Fermi must secure a replacement anchor, line up project debt linked to contracted cash flows, or issue new equity or preferreds. Each step carries timing and pricing risk. Delays risk pushing first power, which could ripple into revenue timing and covenant pressure.
Watch for a new anchor tenant term sheet, a revised funding plan, and a construction notice to proceed. Those will set the new clock.
Valuation Versus Execution Risk
At today’s levels, the market is repricing execution risk. Discounted cash flow models I reviewed peg fair value near 5.67 per share, which implies more downside if funding costs stay high. REITs are sensitive to rates. In this rate environment, project debt is not cheap. Lenders want contracted revenue and strong tenant credit. Fermi has the grid and turbine steps in motion, but it still needs firm lease anchors to unlock lower cost capital.
Equity is the easiest lever, but it is the most painful for existing holders. A large raise at single‑digit prices would dilute. A structured solution, for example project level debt with a completion guarantee, would be less dilutive but harder to secure without a marquee tenant.
Volatility cuts both ways. Positive tenant news can move the stock sharply higher. Funding gaps can do the opposite.
What To Watch Next
Investors need clear milestones. The path from promise to power will show up in filings and updates. The five most important checks now:
- Replacement anchor tenant, even as an MOU with size and credit detail
- A committed financing package, mix of debt and equity, and pricing
- Notice to proceed for early works and EPC contracts, plus cost updates
- Grid interconnect timing and the staged ramp from 86 megawatts
- Liquidity runway, including any covenant waivers or new credit lines
Market And Economic Implications
Fermi’s stumble is a warning for AI infrastructure plays that rely on project finance. The build is capital heavy, and tenant credit is the keystone. When that keystone cracks, the whole structure wobbles. Higher rates amplify the stress. The sector needs long‑dated, investment‑grade leases to clear financing at scale.
There is a silver lining for the local economy if Fermi resets quickly. The Xcel capacity and GE turbines suggest real assets are in motion. If a new anchor signs, suppliers, contractors, and grid partners benefit. If not, projects may be delayed, and capital will flow to better funded peers.
Frequently Asked Questions
Q: Why did FRMI plunge today?
A: A $150 million tenant funding and lease commitment tied to Project Matador was withdrawn on December 11, triggering sharp selling.
Q: Is Project Matador canceled?
A: No. Key power and equipment agreements remain in place. The plan needs a new anchor tenant and a revised funding stack.
Q: What is the near term stock driver?
A: A replacement tenant agreement and a committed financing package. Those two items can reset the risk profile.
Q: Will Fermi need to raise equity?
A: It is likely unless it secures large project debt supported by contracted cash flows. Equity would dilute, but it extends runway.
Q: What timeline should investors expect?
A: Watch for updates in the coming weeks. A credible tenant and financing update in the next quarter would be a strong signal.
Fermi is now a proof‑of‑execution story. The company still controls key assets and agreements, but the lost anchor exposed a funding gap. Fill that gap quickly, and the stock can stabilize. Miss the next milestones, and the cost of capital climbs, with shareholders footing the bill.
