FRMI Stock Fell 41% After the $6.5 Billion TensorWave Lease Missed

FRMI fell 41% after the $6.5B lease missed its date

0:00 Fermy stock, ticker symbol FRMI, fell about 41% in four trading days to around a dollar and 50 cents after its $6.5 billion lease with TensorWave missed its October 31st closing date. And the average Wall Street price target is still above $16. So, if you're bullish, neither side has walked away. And Fermy says it expects to share more on its earnings call on November 12th. But if you're skeptical, stick around because the biggest thing on the missing list isn't paperwork.

0:25 It's the money to build the place. And that $16 looks a lot stranger now than it did in my last video. If you saw my last Fermy video, you'll remember Hank. Hank built a giant truck stop in the middle of nowhere with his own power plant out back before a single trucker had signed up. Then, in August, a trucker finally signed. His rich uncle came along to cosign. And by then, the fine print said none of it counted unless the deal closed by Halloween.

0:49 Well, as we all know, Halloween came and went, and the deal did not close. It didn't get extended, and nobody tore it up. So, Hank's just sitting in a lawn chair staring at the highway. My name is Blake. I dig up stocks before the bull stampedes so you're not buying at the top like Wojak.

FRMI stock and the TensorWave lease

1:10 And today, on 9 to 5 Investing, we're talking about FRMI stock and what happens when a $6.5 billion lease misses its date. So, let's swap Hank for the real names because the dates are the whole story here. Fermy is trying to build Project Matador, a giant private power and data center campus near Amarillo, Texas. And Hank's truckers are the AI companies that would rent it. On August 10th, Fermy announced its first binding tenant, TensorWave, an AI cloud company that runs on AMD chips.

1:36 And the deal was 222 megawatts for 15 years with about $6.5 billion of expected contracted revenue. That works out to more than 400 million a year if everything gets built and everybody pays. So, you can see why the stock jumped that week. But the fine print is the whole story.

The fine print: closing conditions

1:51 Fermy's quarterly filing said the lease needed its closing conditions met, including board approvals and project financing, and that either side could terminate if those conditions weren't met. The closing was expected by September 30th, and on September 22nd, they pushed it to October 31st. So, this deal had already used up one extension. Then, in mid-October, came the rich uncle.

AMD's credit support and the $25M loan amendment

2:09 ERCOT signed a credit support agreement behind the lease. Ferme called it a key milestone towards securing project financing, and the stock jumped about 14% that day. But, Evercore's analyst called it, quote, "Progress toward making the project financeable." Which is a very polite way of saying it wasn't financed yet. And days later, Ferme paid 25 million in fees to amend its MUFG equipment loan, which removed a requirement to sign 400 megawatts of leases by November 10th.

2:33 So, Hank paid the bank 25 million to erase a different deadline. Ferme says that also removes about 56 million of potential principal payments over the next few quarters. So, it wasn't nothing, but it tells you how tight this was getting.

Oct 31 passes: not closed, not extended, not dead

2:49 Then, Halloween showed up. In a November 3rd statement, Ferme said the October 31st, 2026 closing date passed without extension, and the lease isn't effective. It also said, quote, "Neither party has exercised any right to terminate the lease." End quote. And CEO Lee McIntyre said, quote, "Both Ferme and Sensor Wave remain committed to this lease." So, that's the outcome. Not closed, not extended, and not dead. Stay with me, buddy. Not closed. Not extended.

3:17 Oh, my bad. Not dead. A 6.5 billion headline is now a deal both sides are choosing to stay in. And from what I can tell from that filing, Ivercity could still decide not to. And the market didn't wait around.

Why the stock fell 41%

3:30 The stock closed at $2.61 on October 30th, and over the next four trading days, it fell about 15%, about 7%, about 11%, and about 16%, closing around $1.50. Now, to be fair, you can't pin all of that on the lease. The last of those days was the stock market's worst day since April 2025, and the NASDAQ fell about 5.5% in a single session. In that same week, Texas voters elected Gina Hinojosa governor, and she's promised a moratorium on data center approvals until the legislature passes new rules.

4:01 And back in July, she even visited the Project Memento site. When I am governor, I will issue a moratorium, a ban on all data center approvals until laws can be passed by the legislature to protect Texans. But she doesn't take office until January 19th, and a local report from that visit says her moratorium would apply to new data centers, while Fermi is already building. So, I can't tell you how much of this actually touches Fermi. Whatever the reason, the damage is real.

4:27 About a week after this headline, this stock opened around $6.40. So, if Wojak bought there, he's down about 76%, and anyone still holding from the $21 IPO price is down more than 90%, and Wojak read the headline, not the conditions. So, what's actually holding this up?

What's holding the lease up: project financing

4:43 Fermi's statement lists work letters and guarantees, operating schedules, and a service agreement, and board approvals, and that's mostly paperwork. But the last item is the one with a price tag. That's project-level financing, which basically just means a loan tied to this one project instead of the whole company. Big enough to pay for building what TensorWave is. And Fermi hasn't put a public number on it, at least not that I can find, and I couldn't find a named lender, either, which is a little like Hank saying the pumps are coming without saying who's paying for them.

5:10 Here's the part which looks like a circle to me. A lender wants to see a real tenant and a real guarantee before it hands over so much money, but the lease doesn't count until the financing shows up. So, the chicken and the egg are both waiting in the parking lot. The uncle was supposed to help break that circle, and AMD's agreement may still do it, but guarantees are still on Fermi's unfinished list. And Fermi itself warned that AMD's obligations come with conditions.

5:32 So, how long can Hank sit in that lawn chair?

Fermi's cash and the going-concern warning

5:37 Snack. Blanket. Fan. Shovel. Well, this is where I put my accountant hat on. At the end of June, Fermi had about $62.5 million of cash, down from about $408.5 million at the end of December after putting more than $620 million into its build-out in 6 months. Then, in July, it raised about $417 million after costs by selling convertible notes, which are basically loans that can turn into shares. So, the tank got refilled, but the cash number that counts now is the one due on November 12th.

6:08 And here is a sentence I'd read twice. That same filing said Fermi's conditions, quote, raised substantial doubt about its ability to continue as a going concern, which is accountant language for we're not sure the lights stay on for the next year before management said its plans alleviate that doubt. As a former auditor, that is not a sentence that you skim. Now, that's not a prediction, and plenty of companies get through it, but Hank's still matters a lot more when the truckers checks haven't started.

6:33 And then, there's Hank's old partner.

Neugebauer, Rick Perry and the annual meeting vote

6:35 Toby Nuegebauer co-founded Fermi. He left as CEO in April, and entities tied to him are still among the biggest shareholders. On October 30th, Fermi held its first annual meeting, and former Texas Governor Rick Perry and director Jeffrey Stein each got more yes votes than no votes. But Fermi's bylaws need a majority of all the shares outstanding, not just the ones that voted, and neither man got there. So, they both stay on the board until somebody replaces them.

6:58 And here's the fun part. In an 8-K, Fermi says entities tied to Nuegebauer held almost 99 million shares. An agreement required them to vote for Perry, and Fermi believes they voted against him, which it calls a breach. Those investors dispute that reading, and no court has decided anything. So, that's Hank and his old partner having a very public Thanksgiving. He's also been selling. Filings show entities tied to Nuegebauer sold about 4.5 million shares in October for about 15.6 million.

7:30 In a Form 144 filed on November 3rd, filed about 2.6 million more. I don't know why he's selling, and big holders sell all the time for all kinds of different reasons. Which brings me back to the number from my last video.

The stale $16 analyst price target

7:42 The average price target is still above $16 at both MarketBeat and Stock Analysis, and that's more than 10 times the stock price. The stock fell more than 40% brutal in a week, and as of November 5th, I couldn't find one analyst who changed the target since the deadline. That's not an opinion anymore, that's a fossil. So, where does $16 even come from? Part of it is old targets from as far back as February, because the four ratings TipRanks counts from the last three months average $10.50.

8:09 And even the lowest of those four, UBS at $6 with a hold rating, is almost four times the stock price. So, let's say hold and implies the stock almost quadruples, and those two ideas don't really go together. Now, here's the conflict check from last time.

The analyst conflict check

8:20 Three of those four firms, Cantor, UBS, and Evercore were named as representatives of the underwriters on Fermium's IPO. In an 8K on the September 2025 deal, and so was Mizuho, whose $11 target just aged out that list. So, they helped sell the stock to the public. But, I'm going to be fair here because a banking role isn't proof of a biased target. UBS and Evercore both downgraded the stock back in May. And the highest of those four targets, $17, came from Stifel, the one firm I didn't find on that agreement.

8:48 So, the problem here isn't a conspiracy, it's a stale number. Every one of those targets was set before the lease missed its date. So, I'd expect them to move, but it's my guess and not a fact.

Bull case vs bear case

8:58 Now, the bull case deserves a fair hearing, and positive Pete has been waiting. Nobody has terminated this lease. The CEO says both sides are committed, and AMD, a real company with real money, put its name behind this thing. It's not just slides, I mean. In September, Fermium showed its first Siemens gas turbines arriving at the site, about 240 tons each, which is a very heavy way of proving you're serious. And at around a dollar and 50 cents, the whole company's market value is a little under 1 billion.

9:23 Well, at the end of June it carried about 1.5 billion of property and equipment. So, if the lease closes and the financing shows up, good news has a lot of room to move the stock. But, negative Nellie has the other side of that. Fermium had more than 500 million dollars of debt at the end of June before those notes. So, the people who lent against its equipment stand in front of you. And if Fermium has to sell new shares around a dollar and 50 cents, it takes a lot more shares to raise the same money than did at 21 dollars.

9:46 And Fermium's own filing says that if capital does not come through, it may have to delay spending or even surrender pledged assets. So, here's how I read it.

My read and what to listen for on Nov 12

9:54 A canceled lease would at least be an answer. But, a lease that missed its date and isn't dead could be worth 6.5 billion or nothing. Right now, nobody's telling you which. So, on November 12th, I'd listen for a few points. The first is whether the Tensor Wave lease closed or got a new date. The second is a name lender with a real dollar amount. And the last is how much cash was left at the end of September and how many new shares it may take. And for the record, I don't own FRMI.

10:20 And this isn't a buy or sell call. But if I were looking at it, I wouldn't count that 6.5 billion until it closes and I wouldn't lean on that $16 price target at all. A sign deal isn't a closed deal and Hank's launch chair is the proof. Until a truck actually pulls in, that sign out front is just a sign. So, do you think this lease closes by the end of the year? Let me know your opinion in the comments section. Hank's still waiting on a truck, but YouTube already pulled up your next video.

10:49 Finally. Next video is over here. Or not.