Fermi (FRMI) Plunges 9.9% on Legal Storm and Project Matador Collapse – Is This the Bottom?

Summary
• Fermi Inc. (FRMI) shares nosedive 9.9% intraday to $8.37, erasing $1.02 from its value in under four hours.
• A class-action lawsuit and termination of a $150M tenant agreement trigger a liquidity crisis and investor panic.
• Options volatility surges, with 30% implied volatility on key puts and calls.

FRMI’s freefall reflects a perfect storm of legal exposure and operational collapse. The stock’s 52-week low of $7.28 looms as a critical psychological threshold, while the options market signals heightened bearish positioning. With turnover at 3.02% of float, the sell-off shows no signs of abating.

Legal Reckoning and Project Matador Meltdown
Fermi’s catastrophic intraday drop stems from twin catalysts: a securities class action lawsuit alleging IPO fraud and the collapse of its flagship Project Matador. The lawsuit, filed by multiple law firms, accuses Fermi of overstating tenant demand and misrepresenting a $150M construction agreement. The termination of this agreement—announced in December 2025—exposed the company’s reliance on a single tenant, triggering a 33.8% pre-market plunge. Legal uncertainty now compounds operational risks, with investors fleeing as the stock trades at a 78% discount to its $36.99 52-week high.

Renewable Energy Sector Mixed as NextEra Falls 3.06%
The Renewable Energy sector remains fragmented, with NextEra Energy (NEE) declining 3.06% amid broader market jitters. While Fermi’s collapse is idiosyncratic, the sector’s exposure to regulatory and capital risks amplifies volatility. NEE’s resilience contrasts with FRMI’s freefall, underscoring divergent investor sentiment between established utilities and speculative energy-tech plays.

Bearish Options Play and ETF Positioning in a Volatile Environment
• RSI: 56.38 (neutral) • MACD: -2.23 (bearish) • Bollinger Bands: $4.07–$15.92 (wide range) • 30D MA: $11.75 (above current price) • Support/Resistance: $16.31–$16.49 (30D range) • Turnover Rate: 3.02% (high liquidity)

Fermi’s technicals point to a continuation of the downtrend, with the 30D MA at $11.75 acting as a key resistance. The RSI hovering near 56 suggests no immediate overbought conditions, but the MACD’s bearish crossover and wide Bollinger Bands indicate heightened volatility. Traders should monitor the $8.37 intraday low and the $7.28 52-week low as critical support levels.

Top Options Contracts:
• FRMI20260220P7.5 (Put):
- Strike: $7.50 • Expiration: 2026-02-20 • IV: 30.00% • Leverage: 7.34% • Delta: -0.0957 • Theta: -0.0009 • Gamma: 0.1894 • Turnover: $272,178
- IV (Implied Volatility): High volatility suggests market anticipation of further downside.
- Leverage: Amplifies returns if the stock breaks below $7.50.
- Delta: Sensitive to price movements, ideal for short-term bearish bets.
- Gamma: High sensitivity to price changes, enhancing payoff potential.
- Turnover: High liquidity ensures easy entry/exit.
- Payoff Calculation: At a 5% downside (ST = $8.13), payoff = max(0, $7.50 - $8.13) = $0.63 per contract. This put offers 8.4% potential return on a $7.50 strike.
- Why it stands out: Combines high IV, leverage, and liquidity for a bearish play on the $7.50 support level.

• FRMI20260320P7.5 (Put):
- Strike: $7.50 • Expiration: 2026-03-20 • IV: 161.64% • Leverage: 4.87% • Delta: -0.2916 • Theta: -0.0120 • Gamma: 0.0558 • Turnover: $19,877
- IV: Extremely high, reflecting deep bearish sentiment.
- Leverage: Moderate but effective for a longer-term bet.
- Delta: Stronger sensitivity to price drops than the February put.
- Theta: Higher time decay, suitable for near-term moves.
- Gamma: Moderate sensitivity, balancing risk and reward.
- Turnover: Sufficient liquidity for position management.
- Payoff Calculation: At a 5% downside (ST = $8.13), payoff = max(0, $7.50 - $8.13) = $0.63 per contract. This put offers 8.4% potential return on a $7.50 strike.
- Why it stands out: High IV and delta make it ideal for capitalizing on a prolonged bearish trend into March.

Aggressive bulls may consider FRMI20260320C15 into a bounce above $11.75. The $15 call has 254% IV and a 10.64% leverage ratio, offering asymmetric upside if the stock rebounds.

Backtest Fermi Stock Performance
Fermi Inc. (FRMI) has experienced significant volatility since its intraday plunge of -10% in 2022. Here's a detailed analysis of its performance:1. Recent Rebound: Fermi's stock has seen a notable rebound, with a 10.25% increase over the past day and a 17.29% rise over the past week. This suggests that investor sentiment may be improving, possibly due to reassessments of Fermi's growth potential and risk profile as it builds out its AI-focused energy and data center plans.2. Long-Term Performance: Despite the recent positive momentum, Fermi's stock has faced challenges, with weaker returns over longer periods such as the past 30 days and 90 days. This indicates that while short-term sentiment is improving, the stock's longer-term performance remains mixed.3. Analyst Sentiment: The consensus among analysts is positive, with a "Buy" recommendation from ten analysts, including a strong buy rating from some. The average 1-year price target is $31.56, which suggests that analysts anticipate further upside potential.4. Market Capitalization: Fermi's market capitalization is substantial, with an intraday value of $5.416 billion as of January 2, 2026. This indicates that the company has a significant market presence, which could be appealing to investors looking for growth opportunities.5. Financial Health Concerns: Fermi is currently unprofitable, with a negative return on equity and relies on external borrowing, which could be a concern for risk-averse investors. However, the company's strategic focus on low-carbon power and AI energy plans may offer a positive outlook for future profitability.In conclusion, while Fermi's stock has experienced a significant downturn since 2022, recent positive developments and analyst sentiment suggest that it could be poised for a comeback. Investors should consider both the potential for growth and the associated risks, particularly given the company's current financial profile and reliance on external financing.

Bottom-Fishing or Legal Abyss? FRMI’s 52-Week Low Looms
Fermi’s freefall is far from over, with legal risks and operational uncertainty creating a toxic mix. The stock’s 52-week low of $7.28 and the $8.37 intraday low are critical psychological thresholds to watch. While the options market signals bearish positioning, the sector leader NextEra Energy (NEE) falling 3.06% highlights broader energy-tech fragility. Investors should prioritize short-term puts like FRMI20260220P7.5 and monitor the $7.50 support level. If $7.28 breaks, the stock could face a liquidity crisis. Watch for $7.28 breakdown or legal updates—this is a high-risk, high-reward scenario.