Fermi's Freefall: A 15.6% Intraday Plunge Amid Tenant Exit and Legal Scrutiny

Summary
• Fermi (FRMI) plunges 15.6% intraday to $8.515, erasing $1.69 from its previous close of $10.09
• $150M construction funding agreement with key tenant terminated, triggering shareholder investigation
• RSI hits 34.56 (oversold) amid heightened volatility and legal uncertainty

Fermi Inc. (FRMI) is in freefall, with shares collapsing 15.6% intraday to $8.515 as of 20:24 ET. The stock’s sharp decline follows the termination of a $150M Advanced in Aid of Construction Agreement (AICA) with its first prospective tenant—a cornerstone of its Project Matador development. The move has triggered legal scrutiny and a 52% drop from its October IPO price, with the stock now trading near its 52-week low of $8.30. Turnover surged to 10.2 million shares, underscoring the market’s panic.

Tenant Exit and Legal Scrutiny Trigger Sharp Sell-Off
Fermi’s 33% single-day drop on December 12 was catalyzed by the abrupt termination of a $150M AICA with its first prospective tenant. The agreement, announced in mid-November, was touted as a framework for cost reimbursement and prepayment to fund Project Matador. However, the tenant’s exit—without explanation—has raised red flags about the company’s transparency. Hagens Berman’s investigation now questions whether Fermi misled investors about the agreement’s strength. The market’s reaction underscores a loss of confidence in management’s ability to secure critical funding and execute its AI infrastructure vision.

Data Center Sector Resilient as Equinix Outperforms
While Fermi’s shares cratered, the broader data center sector showed resilience. Sector leader Equinix (EQIX) rose 1.16% intraday, highlighting the contrast between Fermi’s turmoil and sector stability. Recent sector news includes Google’s Arkansas data center project and Microsoft’s $17.4B GPU deal, underscoring demand for AI infrastructure. However, Fermi’s operational setbacks and legal risks have isolated it from the sector’s upward momentum.

Capitalizing on Volatility: Put Options and ETFs in Focus
• RSI: 34.56 (oversold)
• MACD: -2.37 (bearish), Signal Line: -2.42, Histogram: +0.05
• Bollinger Bands: Upper $19.27, Middle $15.62, Lower $11.98
• 30D MA: $18.54 (above current price)

Fermi’s technicals paint a bearish picture, with RSI in oversold territory and MACD signaling a short-term downtrend. The stock is trading near its 52W low of $8.30, but legal risks and operational uncertainty suggest further volatility. For options traders, the FRMI20260220P7.5 put option (strike $7.50, expiration 2026-02-20) stands out: it has a delta of -0.289, implied volatility of 168.22%, and turnover of 18,928. A 5% downside to $8.23 would yield a put payoff of $0.77 per contract, offering 25.9% gains. The FRMI20260220C10 call (strike $10, delta 0.541, IV 152.01%) is a high-leverage play for a potential rebound, with a 35.9% price drop risk. Both contracts reflect elevated volatility and liquidity, making them viable for directional bets. Aggressive short-term traders may consider the put for downside protection, while bulls could use the call as a speculative leveraged play.

Backtest Fermi Stock Performance
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Act Now: Navigating Fermi's Turbulent Waters
Fermi’s freefall is far from over. With the stock trading near its 52W low and legal scrutiny intensifying, the immediate outlook remains bearish. Investors should monitor the 52W low of $8.30 as a critical support level and watch for further tenant-related updates. The sector leader, Equinix (EQIX), is up 1.31% intraday, highlighting the contrast between Fermi’s turmoil and broader sector resilience. For those with exposure, tightening stop-loss orders below $8.48 is prudent. Aggressive traders may target the FRMI20260220P7.5 put for a potential 25.9% gain if the stock breaks below $8.30. However, the path forward hinges on resolving the tenant dispute and legal uncertainties—key catalysts that could either stabilize or deepen the sell-off.