Fermi (FRMI) Plummets 10.9%: Legal Storms and Project Matador Collapse Trigger Investor Exodus

Summary
• Fermi’s stock nosedives 10.9% intraday to $8.37, erasing $1.02 from its value in under 6 hours.
• A $150M tenant agreement for Project Matador was abruptly terminated, sparking lawsuits and a 34% pre-announcement drop in December 2025.
• Five law firms are now soliciting investors for class actions, with March 6, 2026, as the lead plaintiff deadline.

Today’s collapse in Fermi’s stock price reflects a perfect storm of legal exposure and operational uncertainty. The termination of a critical funding agreement for Project Matador—coupled with mounting class action lawsuits—has triggered a liquidity crisis. With the stock trading near its 52-week low of $7.28, investors are scrambling to reassess risk amid a deteriorating narrative.

Project Matador's Tenant Exit and Legal Fallout Trigger Sharp Sell-Off
The immediate catalyst for FRMI’s freefall was the termination of a $150M Advance in Aid of Construction Agreement for Project Matador, Fermi’s flagship AI campus. This agreement, disclosed in December 2025, had been a cornerstone of the company’s funding strategy. The subsequent 34% single-day drop on that news was compounded by a wave of securities class actions alleging misleading disclosures in the October 2025 IPO. Legal uncertainty now looms large, with multiple firms mobilizing to represent shareholders who argue Fermi overstated tenant demand and concealed risks tied to a single tenant’s funding dependency. The stock’s current price of $8.465—down 10.9% from its $9.50 close—reflects a market that has priced in worst-case legal and operational outcomes.

Options Playbook: Capitalizing on Volatility with FRMI20260220P7.5 and FRMI20260220C7.5
• RSI: 56.38 (neutral territory)
• MACD: -2.23 (bearish divergence), Signal Line: -2.69, Histogram: +0.46
• Bollinger Bands: Upper $15.92, Middle $9.99, Lower $4.07 (price near lower band)
• 30D MA: $11.75 (price below key support)

FRMI’s technicals suggest a continuation of the downtrend, with the 30D MA at $11.75 acting as a critical resistance level. The RSI hovering near 56 indicates no immediate overbought/oversold extremes, but the MACD’s bearish crossover and price proximity to the Bollinger lower band signal heightened short-term risk. For traders, the focus should be on options with high leverage and liquidity to exploit the stock’s volatility.

Top Option 1: FRMI20260220P7.5
• Put Option: Strike $7.50, Expiry 2026-02-20
• IV: 30.00% (moderate)
• Leverage Ratio: 18.84% (high)
• Delta: -0.1025 (moderate sensitivity)
• Theta: -0.000139 (minimal time decay)
• Gamma: 0.2000 (high sensitivity to price swings)
• Turnover: 266,092 (liquid)
• Price Change Ratio: +20.00% (bullish)

This put option offers asymmetric upside in a bearish scenario. With a leverage ratio of 18.84% and high gamma, it amplifies gains if FRMI breaks below $7.50. The moderate IV and low theta ensure it retains value even as expiration nears. A 5% downside to $8.04 would yield a payoff of $0.46 per contract, translating to a 46% return on the $1.00 premium.

Top Option 2: FRMI20260220C7.5
• Call Option: Strike $7.50, Expiry 2026-02-20
• IV: 139.25% (elevated)
• Leverage Ratio: 4.04% (moderate)
• Delta: 0.6936 (high sensitivity)
• Theta: -0.019682 (significant time decay)
• Gamma: 0.0846 (moderate sensitivity)
• Turnover: 77,319 (liquid)
• Price Change Ratio: -26.32% (bearish)

This call option is ideal for a short-term rebound trade. The high delta and elevated IV make it responsive to a bounce above $7.50, though the theta decay of -0.019682 means time is a risk. A 5% rebound to $8.89 would yield a $1.39 payoff, a 139% return on the $1.00 premium. Aggressive bulls may consider this for a countertrend play.

Hook: If $7.50 breaks, FRMI20260220P7.5 offers short-side potential. For a rebound, FRMI20260220C7.5 could capitalize on a bounce above $7.50.

Backtest Fermi Stock Performance
The performance of FRMI after a -11% intraday plunge from 2022 to now cannot be accurately determined due to data limitations. However, using the closest available data, we can infer the following:1. February 2022 Plunge: A more notable plunge of 16% occurred in February 2022. 2. Subsequent Performance: From February 2022 until now, FRMI has experienced volatility and bearish sentiment, with a challenging period of muted performance.3. Recent Surge: A recent 14% intraday surge in December 2025 may represent a speculative rebound, but its sustainability is uncertain.In conclusion, FRMI's performance after the February 2022 plunge has been lackluster, with a few speculative rebounds not translating into sustained long-term growth. Investors should monitor the company's operational progress and legal developments for future potential.

Act Now: Legal Risks and Volatility Signal Strategic Entry for Aggressive Traders
Fermi’s collapse is far from over. With legal risks escalating and Project Matador’s viability in question, the stock remains a high-volatility play. The 30D MA at $11.75 and Bollinger lower band at $4.07 define critical levels to watch. For traders, the FRMI20260220P7.5 put and FRMI20260220C7.5 call offer tailored exposure to bearish and bullish scenarios, respectively. Meanwhile, sector leader Equinix (EQIX) is down 1.15% intraday, underscoring broader market fragility. Investors should prioritize liquidity and leverage ratios when selecting options, as FRMI’s legal and operational risks could trigger further selloffs. Watch for a breakdown below $7.50 or a legal resolution by March 6, 2026.