Fermi (FRMI) stock fell roughly 16.6% on Friday after the company priced a $375 million convertible senior notes offering late Thursday. The stock opened at $6.15, down from a prior close of $7.32, and last traded around $6.19 on volume exceeding 22 million.
The notes carry a 5.00% rate and mature in 2031. They were sold to qualified institutional buyers under Rule 144A. Initial purchasers also hold an option to buy an additional $56.25 million in notes, bringing the potential total to $431.25 million.
The conversion price is set at approximately $9.52 per share. Fermi said it will use part of the proceeds to fund capped call transactions, a structure designed to limit dilution for existing investors up to $14.64 per share.
Despite that cushion, the market wasn’t impressed. The prospect of that much dilution hitting a stock already under pressure was enough to spark a sharp sell-off that began in after-hours trading and carried into Friday’s session.
The offering lands on already shaky ground. Fermi reported a net loss of approximately $189 million in Q1 2026, driven largely by non-cash share-based compensation. The company generated zero revenue during the quarter, missing analyst forecasts entirely.
That miss had already triggered a wave of analyst downgrades. Evercore cut Fermi from “outperform” to “in-line.” Wall Street Zen dropped it from “hold” to “sell.” Stifel Nicolaus slashed its price target from $29.00 to $17.00, though it kept a “buy” rating. Weiss Ratings reiterated a “sell (d-)” rating as recently as July 2.
The consensus rating across analysts sits at “Moderate Buy” with an average price target of $22.44 — a long way from where the stock is trading today.
The company said proceeds from the notes will help fund Project Matador, its gigawatt-scale AI power campus in Amarillo, Texas.
Insider activity has not been reassuring. Director James Richard Perry sold 863,637 shares on June 30 at an average price of $7.31, a transaction worth over $6.3 million. That sale reduced his ownership by 5.17%.
Insider Mesut Uzman also sold 79,509 shares on June 3 at $6.31 per share. In total, insiders have sold over 1 million shares in the past 90 days, worth approximately $7.3 million.
Cantor Fitzgerald initiated coverage in April with an “overweight” rating and an $8.00 price target — one of the more cautious bull cases on the street.
The stock’s 52-week high stands at $36.99. Friday’s trading has pushed FRMI toward $6.19, not far above its 52-week low of $4.47. The convertible notes deal is set to close on July 14, 2026.
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