Fermi: Speculative Hype vs. Filing Reality—No Anchor Contract, Covenant Clock Ticking

What happened

A Seeking Alpha article paints Fermi as a hyper-high-reward AI infrastructure REIT with a 17 GW Texas campus, projecting 2028 revenues of $4.5B and a potential 2x forward P/FFO. However, the latest DeepValue master report reveals a starkly different picture: the Feb-2026 equipment facility carries a 12.90% coupon, a $20M minimum liquidity covenant, and a Dec 31, 2026 deadline to sign an “Approved Customer Agreement” or face mandatory prepayment. As of mid-2026, no such contract has been filed, and the earlier $150M tenant agreement terminated in December 2025, leaving financing draw conditions unmet. The stock has already fallen 76% from its IPO price, and the market is pricing in narrative progress rather than contractual proof. Put simply, the SA article ignores the binding covenant structure that makes equity dilution or distressed financing the default path absent a filed anchor contract.

Implication

For investors, FRMI remains a POTENTIAL SELL with a $4.50-$7.75 bear-to-base range, reflecting the high probability of dilution if no Approved Customer Agreement appears by Dec 31, 2026. The SA article glosses over the fact that the 16x P/FFO multiple is based on hypothetical cash flows that require flawless execution, while the balance sheet carries covenant-driven prepayment risk and no earnings floor. Even in the bull case ($12.50), the upside requires both a signed contract and turbine deliveries in 1H26—neither of which has been confirmed in SEC filings. The only safe entry is after observable proof of a binding tenant agreement that removes the liquidity cliff, and even then, the 12.90% debt cost and high equity dilution overhang limit long-term returns. Monitor filings for UCC-1 completions and the 86MW ESA ramp as leading indicators, but do not buy on narrative alone.

Thesis delta

The previous thesis assumed financing and permitting progress would eventually de-risk the story; now, the absence of any filed anchor contract through mid-2026, combined with the Dec 31, 2026 covenant deadline, shifts the call to POTENTIAL SELL. The SA article’s optimistic revenue projections are not grounded in the current filing reality—the company has no contracted tenants, and its financing facilities are contingent on conditions that have not been satisfied. The market is mispricing the probability of a liquidity event. Until an Approved Customer Agreement is filed and turbine deliveries are confirmed, the risk of total loss or severe dilution dominates any potential reward.