Fermi Plummets 9.26% Amid Legal Storm: Project Matador Fallout Sparks Investor Exodus

Summary
• Fermi (FRMI) crashes 9.26% intraday, trading at $9.355 after opening at $10.225
• Legal turmoil erupts as class-action lawsuits allege securities fraud tied to Project Matador
• Options chain surges with 216,960 shares traded in 7.5-strike put options ahead of February expiry
• Sector peers like Equinix (EQIX) also retreat, signaling broader market jitters in data center REITs

Fermi’s stock is in freefall as a deluge of lawsuits and operational setbacks collide. The company’s flagship Project Matador AI campus, once a beacon of growth, now anchors a legal quagmire. With intraday volatility spiking and options markets bracing for further declines, investors are scrambling to assess the fallout from a terminated $150M funding agreement and a 33.8% single-day plunge in December 2025. The stock’s 52-week low of $7.28 looms as a critical psychological threshold.

Project Matador Meltdown: Legal and Operational Catastrophe
Fermi’s collapse stems from a perfect storm of legal exposure and operational failure. The company faces multiple class-action lawsuits alleging it overstated tenant demand and concealed risks tied to Project Matador’s reliance on a single tenant’s $150M funding commitment. When that tenant terminated the agreement in December 2025, Fermi’s stock cratered 33.8% in a single day. The lawsuits now target IPO investors and those who bought shares between October and December 2025, accusing management of misleading disclosures. With the stock trading 9.26% lower on January 14, 2026, and Bollinger Bands indicating oversold conditions, the legal and operational clouds show no sign of clearing.

Data Center REITs Under Pressure: EQIX Drags Sector Lower
The broader data center REIT sector is buckling under regulatory and market pressures. Equinix (EQIX), the sector’s bellwether, fell 1.39% intraday, amplifying concerns about capital discipline and AI-driven demand. Hazelview Investments’ recent report highlighted data centers as a ‘structural growth’ segment, yet Fermi’s collapse underscores the fragility of single-tenant models. While industrial and healthcare REITs outperformed in 2025, Fermi’s legal woes and Project Matador’s funding implosion have cast a shadow over the sector’s optimism.

Bearish Playbook: Put Options and ETFs to Hedge the Legal Fallout
• Technical Indicators: 30D MA at $10.82 (above current price), RSI at 60.75 (neutral), MACD at -1.35 (bearish divergence)
• Key Levels: Bollinger Band support at $7.13, 30D support at $8.41–$8.59
• ETF Exposure: Tortoise AI Infrastructure ETF (TCAI), down 1.25%, and Sovereign’s Capital Flourish Fund (SOVF), up 0.23%, offer thematic exposure to AI infrastructure but remain volatile

Top Options:
• FRMI20260220P7.5 (Put, $7.5 strike, Feb 20 expiry):
- IV: 30.00% (moderate)
- LVR: 9.44% (high leverage)
- Delta: -0.00686 (short-term sensitivity)
- Theta: -0.000157 (slow decay)
- Gamma: 0.02096 (responsive to price swings)
- Turnover: 108,045 (liquid)
- Why: High leverage and liquidity make this put ideal for capitalizing on a potential $7.13 support test.
• FRMI20260320P7.5 (Put, $7.5 strike, Mar 20 expiry):
- IV: 30.00% (moderate)
- LVR: 6.99% (moderate leverage)
- Delta: -0.027288 (short-term sensitivity)
- Theta: -0.000402 (slow decay)
- Gamma: 0.052247 (high responsiveness)
- Turnover: 49,075 (liquid)
- Why: Longer expiry and higher gamma position this as a hedge against prolonged legal uncertainty.

Payoff Scenario: A 5% downside to $8.90 would yield $0.90 per contract for the Feb 7.5 put (9.355 → 8.90). For the Mar 7.5 put, the same move would generate $1.45 per contract. Aggressive bears may consider the Feb 7.5 put into a $7.13 support test, while long-term hedgers should eye the Mar 7.5 put for extended legal risk.

Backtest Fermi Stock Performance
The backtest of Fermi America LLC (FRMI) performance after a -9% intraday plunge from 2022 to now cannot be accurately conducted due to data limitations. The historical price data for FRMI is incomplete, returning an empty set when attempting to download. This is likely due to one of the following reasons:1. Ticker Symbol Issue: The ticker symbol used might be incorrect, such as using "FRMI" instead of "FRMI.O".2. Company Status: The company could be newly listed or thinly traded, resulting in incomplete daily data.3. Data Vendor Coverage: The security might not be covered by the data vendor.To proceed with the backtest, the correct ticker symbol or the specific dates of the intraday plunge should be provided. Without this information, it is not possible to assess the performance of FRMI after the -9% drop from 2022 to the present day.

Legal Abyss Deepens: Act Before March 6 Lead Plaintiff Deadline
Fermi’s freefall is far from over. With lawsuits mounting and Project Matador’s viability in doubt, the stock’s path to recovery hinges on resolving legal exposure and securing new funding. Investors should prioritize the FRMI20260220P7.5 put for short-term bearish bets and monitor the Tortoise AI Infrastructure ETF (TCAI) for sector-wide sentiment. The sector leader Equinix (EQIX), down 1.39%, offers a barometer for data center REIT resilience. Act now: March 6 is the lead plaintiff deadline for class-action lawsuits—positions must align with legal timelines. Watch for a breakdown below $7.13 or a regulatory intervention to pivot strategy.