Dallas, July 10, 2026 – Shares of Fermi Inc. (NASDAQ:FRMI) plunged 17.8% in early Friday trading, settling at $6.02 after the company priced an upsized $375 million convertible bond offering. The sharp decline wiped out approximately $820 million in market capitalization, exceeding the total proceeds of the debt sale by more than twofold.
The convertible notes, which can be exchanged for common stock at a later date, are intended to replenish Fermi’s dwindling cash reserves rather than provide a significant new financial cushion. After underwriting fees and related expenses, the company expects net proceeds of roughly $362.25 million. Of that amount, about $30 million will be used to fund a capped call transaction—a hedging strategy designed to mitigate potential dilution from the conversion—leaving approximately $332.25 million for general corporate purposes.
Fermi’s cash position had fallen sharply in recent months. As of June 30, the company held $92 million in cash, including $29.2 million in restricted funds, compared to $408.5 million at the end of December. The first quarter alone saw $441.2 million in capital expenditures for property and equipment. Simply adding the usable proceeds to the June balance, before accounting for any subsequent spending, would bring cash to roughly $424 million—close to the level at the start of the year. That retained cash represents about 75% of one quarter’s recent project investment. Meanwhile, adding the notes to existing equipment borrowings would increase principal debt by approximately 70%, from $536.9 million to a pro-forma $911.9 million.
Conversion Terms and Dilution Risk
The convertible bonds carry an initial conversion price of $9.52 per share, roughly 58% above Friday’s early price of $6.02. The capped call is expected to offset dilution up to $14.64 per share, or 143% above the current level. The base notes initially represent 39.4 million underlying shares, which would increase to about 45.3 million if buyers exercise the full $56.25 million option. That equates to 6.3% and 7.2% of the March 31 share count, respectively.
While the conversion structure is set above the current share price, it does not eliminate the risk associated with equity-linked dilution. The company also warned that trading activities by the capped-call counterparties could move its shares in either direction.
Market Context and Company-Specific Concerns
The selloff was not part of a broader retreat among data-center 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 divergence highlights company-specific worries about Fermi’s funding needs and execution timeline.
Fermi’s latest investor presentation provided additional commercial details. The company reported engagements with seven prospective tenants and 12 potential joint-venture partners, with more substantive negotiations underway among a smaller group. Management is targeting its first binding tenant or joint-venture agreement in the third quarter and indicated that it is in advanced talks with a potential chief executive.
That timetable sharpens earlier promises. Chairman Marius Haas stated in May that the company’s 90-day plan included “securing a binding tenant agreement.” Co-President Anna Bofa noted that “the uptick in interest from prospective tenants confirms our business plan.” The July update now sets a quarter-end deadline for investors to evaluate those claims.
REIT Status and Financial Outlook
A separate July 9 filing revealed that Fermi has deferred its intended election as a real estate investment trust (REIT) for 2025. The company now expects to seek REIT status for 2026 but provided no assurance that it will do so or qualify. A REIT generally avoids federal corporate tax on income distributed to shareholders, provided it meets certain asset, income, and distribution requirements. The delay introduces another variable to Fermi’s tax profile and valuation.
Despite the financing, the fundamental downside remains. As of March 31, Fermi had no operating revenue, and its quarterly filing stated that available resources were insufficient to meet obligations over the following year before management’s borrowing and spending plans were considered. Management concluded that those measures alleviated the substantial doubt, but a tenant delay, cost overrun, or inability to secure project-level funding could still force another debt or equity raise.
The note sale is scheduled to close on July 14. Investors will be closely watching for any updates on tenant agreements, joint ventures, and the company’s path toward revenue generation.
