Shares of Fermi Inc. slid to $6.21 on Monday, extending a bruising week that has seen the stock shed nearly 18% from its recent high of $7.60, as twin federal investigations cast a shadow over the small-cap data center developer's future. Fermi's Dual Federal Probes Threaten to Unravel a Pre-Revenue Megaproject — How Much Risk Can $91 Million in Cash Absorb?
Shares of Fermi Inc. dropped to $6.21 Monday, extending a punishing five-session slide from $7.60, after the company disclosed that both a U.S. District Court and the Securities and Exchange Commission have subpoenaed documents tied to its flagship Texas data center development and former executives. For a company that has never generated a dollar of revenue, the timing could hardly be worse.
• Two Federal Probes at Once Multiply the Legal Exposure. The Eastern District of New York issued its subpoena on July 30, demanding records about Project Matador — Fermi's planned mega-campus in west Texas — as well as materials tied to former management.
The SEC filed a parallel document request on August 3. Dual investigations — one criminal-adjacent court subpoena, one regulatory — signal prosecutors and regulators may be coordinating. That raises the specter of enforcement actions, fines, or injunctions that could freeze the company's ability to raise fresh capital.
• A $6.5 Billion Contract Hangs in the Balance. Just days before the subpoena disclosure, Fermi announced a 15-year binding lease with AI cloud provider TensorWave covering 222 MW at Project Matador — worth roughly $6.5 billion in total contract revenue. That deal is the only signed customer commitment. Key risks include finalizing the TensorWave backstop agreement, securing project financing, and synchronizing equipment delivery with construction. A prolonged investigation could spook TensorWave or its lenders, jeopardizing the contract before it generates a cent.
• Cash Is Thin for a Company Fighting on Multiple Fronts. Fermi posted a net loss of $25.8 million in Q2 2026 and held just $91.7 million in cash against $520 million in debt and $1.55 billion in property costs.
It recently raised $431 million in convertible notes, netting about $382 million. Legal defense bills and potential settlement costs now compete directly with construction spending at a site that needs billions more to reach commercial operation.
• A Pattern of Credibility Problems Preceded the Probes. An earlier tenant funding agreement collapsed after the exclusivity window expired, and the tenant formally pulled out — all within weeks of an investor presentation that showed negotiations were already behind schedule.
A class-action lawsuit alleges Fermi overstated tenant demand and hid its dependence on a single funder.
The company raised $682 million in an October 2025 IPO despite having no operating data centers and little executive experience in the sector. Each new revelation makes the next financing round harder — and for a pre-revenue firm burning cash, that is an existential equation.