TLDR
- Fermi (FRMI) fell 4.3% Monday after disclosing a subpoena from a U.S. District Court linked to its Project Matador data center campus in west Texas.
- The Eastern District of New York also requested records tied to former members of Fermi’s management team, with the SEC making a similar document request.
- Manufacturers Life Insurance sold 374,995 FRMI units, cutting its stake by 81.7% in Q1.
- Fermi signed its first binding lease with TensorWave for up to 650 megawatts, and named Lee McIntire as CEO last week.
- The stock opened at $6.40, well below its 52-week high of $36.99, with analysts expecting a full-year loss of $0.33 per share.
Fermi (FRMI) dropped 4.3% on Monday after the company disclosed it received a subpoena from the U.S. District Court for the Eastern District of New York. The request is tied to documents related to Project Matador, Fermi’s data center campus under development in west Texas.
The subpoena also sought records connected to former members of Fermi’s management team. The SEC made a similar document request, according to a Friday filing.
The stock opened at $6.40 Monday, down roughly 3% Friday before the additional Monday slide. That puts it a long way from its 52-week high of $36.99.
The legal pressure adds to an already turbulent stretch for the company. Co-founder and former CEO Toby Neugebauer exited in April, partly due to struggles securing an anchor tenant for Project Matador. Fermi then named Lee McIntire, a former independent director, as CEO last Wednesday.
First Anchor Tenant Secured
Despite the headline risk, Fermi did score a win last week. The company signed its first binding lease with AI-computing provider TensorWave for up to 650 megawatts of capacity. That gives Project Matador its first confirmed customer.
Construction firm Hillcore is also set to build a 2.6-gigawatt gas-fired power complex at the Matador site in Amarillo, Texas. Fermi says it expects 640 megawatts to be operational by Q4 2027.
Project Matador could eventually reach 17 GW of total capacity, the company has said.
Institutional Selling and Analyst Pressure
Manufacturers Life Insurance cut its Fermi position by 81.7% in Q1, selling 374,995 units and retaining just 83,805 valued at around $489,000. Several smaller institutional investors did open new positions in Q4, but the selling pressure from larger holders stands out.
Insiders have also been selling. Director James Richard Perry, co-founder of the company alongside former Texas Governor Rick Perry, sold 863,637 units on June 30 at an average of $7.31, for a total of over $6.3 million. Insider Mesut Uzman sold 79,509 units on June 3 at $6.31. Over the past 90 days, insiders have offloaded over 1 million units worth roughly $7.3 million.
On the analyst side, the picture is mixed. Stifel Nicolaus cut its target from $29 to $17 but kept a “buy” rating. Mizuho dropped its target from $27 to $11 while keeping “outperform.” UBS downgraded from “buy” to “neutral” with a $6 target. The consensus sits at “Moderate Buy” with an average price target of $20.67.
Fermi reported Q2 earnings of -$0.04 per share, better than the -$0.06 consensus. But analysts still expect a full-year loss of around $0.33 per share.
The company says it has raised more than $431 million in capital and delivered three F-Series turbines as part of its 90-day milestone targets. The stock’s 50-day moving average sits at $7.20.
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