TLDR
- Fermi (FRMI) shares declined 4.3% Monday following disclosure of a federal subpoena from a U.S. District Court concerning its Project Matador data center development in western Texas.
- The U.S. District Court for the Eastern District of New York sought documentation relating to previous members of Fermi’s executive leadership, while the SEC issued parallel document demands.
- Manufacturers Life Insurance liquidated 374,995 FRMI shares, reducing its holdings by 81.7% during the first quarter.
- The company secured its inaugural binding lease agreement with TensorWave for capacity up to 650 megawatts and appointed Lee McIntire as chief executive last week.
- FRMI opened trading at $6.40, significantly beneath its 52-week peak of $36.99, while Wall Street forecasts an annual loss of $0.33 per share.
Fermi (FRMI) experienced a 4.3% decline Monday after revealing it had received a subpoena from the U.S. District Court for the Eastern District of New York. The legal demand centers on documentation concerning Project Matador, the company’s data center facility currently being developed in western Texas.
The court order additionally requested materials linked to previous members of the company’s executive management. The Securities and Exchange Commission issued comparable documentation demands, based on a regulatory filing submitted Friday.
Shares began Monday’s session at $6.40, following a roughly 3% Friday decline that preceded the additional Monday retreat. The current price represents a steep drop from the stock’s 52-week peak of $36.99.
This legal development compounds an already challenging period for the organization. Co-founder and previous chief executive Toby Neugebauer departed in April, partially attributed to difficulties in securing a primary tenant for Project Matador. The company subsequently appointed Lee McIntire, previously serving as an independent board member, to the CEO position last Wednesday.
Initial Major Tenant Agreement Finalized
Amid the regulatory headwinds, Fermi achieved a significant milestone last week. The organization executed its initial binding lease contract with AI-computing company TensorWave for capacity reaching up to 650 megawatts. This agreement provides Project Matador with its first guaranteed occupant.
Construction company Hillcore will develop a 2.6-gigawatt natural gas power facility at the Matador location in Amarillo, Texas. Fermi anticipates 640 megawatts becoming operational by the fourth quarter of 2027.
According to company projections, Project Matador has the potential to ultimately achieve 17 GW of aggregate capacity.
Institutional Exits and Analyst Downgrades
Manufacturers Life Insurance reduced its Fermi holdings by 81.7% during the first quarter, liquidating 374,995 shares while maintaining only 83,805 shares valued at approximately $489,000. While several smaller institutional investors established new positions in Q4, the divestment by major shareholders remains notable.
Company insiders have also been divesting shares. Director James Richard Perry, who co-founded the organization alongside former Texas Governor Rick Perry, liquidated 863,637 shares on June 30 at an average price of $7.31, totaling more than $6.3 million. Insider Mesut Uzman sold 79,509 shares on June 3 at $6.31. Throughout the previous 90 days, insiders have sold over 1 million shares totaling approximately $7.3 million.
Regarding analyst coverage, perspectives vary. Stifel Nicolaus lowered its price target from $29 to $17 while maintaining a “buy” recommendation. Mizuho reduced its target from $27 to $11 while preserving an “outperform” rating. UBS shifted its recommendation from “buy” to “neutral” with a $6 price target. The consensus rating stands at “Moderate Buy” with an average price objective of $20.67.
Fermi posted Q2 earnings of -$0.04 per share, exceeding the -$0.06 analyst consensus. However, Wall Street continues to project a full-year loss of approximately $0.33 per share.
The organization reports raising over $431 million in capital and completing delivery of three F-Series turbines as components of its 90-day milestone objectives. The stock’s 50-day moving average currently stands at $7.20.
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