Dallas, July 10, 2026, 09:09 (CDT)
Fermi Inc. NASDAQ:FRMI shares were down 17.8% at $6.02 in early Friday trading after the AI-power developer priced an upsized $375 million convertible bond, debt that can later be exchanged for stock. The slide erased about $820 million of market value, more than twice the amount being raised.
The reaction matters because the financing mostly rebuilds a depleted cash pile rather than creating a large new cushion. Fermi expects $362.25 million after fees and plans to spend about $30 million on a capped call, a hedge designed to reduce future dilution, leaving roughly $332.25 million for general purposes. Cash stood at $92 million on June 30, including $29.2 million of restricted funds, against $408.5 million at the end of December. Fermi also spent $441.2 million on property and equipment in the first quarter.
Simply adding the usable proceeds to the June balance, before any later spending, would leave about $424 million — close to where Fermi began the year. The retained cash equals roughly 75% of one quarter’s recent project investment, while adding the notes to June equipment borrowings would lift principal debt by about 70%.
| Balance-sheet comparison | Earlier reference | After the base note sale |
|---|---|---|
| Cash, including restricted funds | $408.5 mln at Dec. 31; $92.0 mln at June 30 | About $424.3 mln, before later spending |
| First-quarter property and equipment investment | $441.2 mln | Usable proceeds equal about 75% |
| Reported equipment borrowings | $536.9 mln at June 30 | Simple pro-forma principal debt of $911.9 mln |
| New cash interest | — | $18.75 mln a year |
The conversion structure pushes potential dilution above the current share price, but does not remove the share-linked risk. The initial conversion price is $9.52, while the capped call is expected to offset dilution up to $14.64. Those levels are about 58% and 143%, respectively, above Friday’s early price. The base notes initially represent 39.4 million underlying shares; the total would rise to about 45.3 million if buyers take the full $56.25 million option.
| Conversion comparison | Base transaction | Full buyer option/current comparison |
|---|---|---|
| Initial conversion price | $9.52 | 58% above $6.02 |
| Capped-call cap | $14.64 | 143% above $6.02 |
| Shares initially underlying notes | 39.4 mln | 45.3 mln with full option |
| Equivalent to March 31 share count | 6.3% | 7.2% with full option |
This was not a broad retreat among data-centre landlords. Digital Realty Trust NYSE:DLR gained about 0.5% and Equinix NASDAQ:EQIX rose 0.7% in early trading, while the Nasdaq Composite was down just 0.12% at the opening bell. The gap points to company-specific concern over Fermi’s funding needs and execution timetable.
Fermi’s latest presentation offered more detail on the commercial side. It said the company had engaged with seven prospective tenants and 12 potential joint-venture partners, with more substantive negotiations under way among a smaller group. Management is targeting its first binding tenant or joint-venture agreement in the third quarter and said it was in advanced talks with a potential chief executive.
That timetable sharpens earlier promises. Chairman Marius Haas said in May that the company’s 90-day plan included “securing a binding tenant agreement.” Co-President Anna Bofa said “the uptick in interest from prospective tenants confirms our business plan.” The July update now gives investors a quarter-end test for those claims. PR Newswire
A separate July 9 filing said Fermi had deferred its intended election as a real estate investment trust, or REIT, for 2025. The company expects to seek REIT status for 2026 but gave no assurance that it will do so or qualify. A REIT generally avoids federal corporate tax on income distributed to shareholders if it meets asset, income and distribution rules; the delay adds another variable to Fermi’s tax profile and valuation.
But the financing does not settle the central downside. As of March 31, Fermi had no operating revenue, and its quarterly filing said available resources were insufficient to meet obligations over the following year before management’s borrowing and spending plans were considered; management concluded those measures alleviated the substantial doubt. A tenant delay, cost overrun or inability to secure project-level funding could still force another debt or equity raise. Fermi also warned that trading by the capped-call counterparties could move its shares in either direction. The note sale is scheduled to close on July 14.
