Assessing Fermi (FRMI) After Project Matador Funding Collapse and Sharp Drop in Investor Confidence

Fermi (FRMI) just hit an inflection point after its first investment grade tenant walked away from a $150 million construction funding agreement tied to Project Matador, sending the stock sharply lower and shaking near term confidence.

See our latest analysis for Fermi.

The terminated funding agreement did not just knock sentiment today; it capped a brutal stretch where the share price return is down 53 percent over 30 days and 73 percent year to date, even as Fermi continued to sign power supply deals that support the long term AI grid vision.

If this kind of volatility has you rethinking concentration risk, it might be a good moment to explore fast growing stocks with high insider ownership as potential alternative growth ideas.

With FRMI now trading around 70 percent below its price target and sentiment in free fall, is this simply a broken story or a rare chance to buy long duration AI power infrastructure before markets reprice future growth?

DCF Valuation Check: Is The Discount Real?

Our DCF model estimates Fermi's fair value at about $5.66 per share, which sits well below the last close of $8.59, implying the stock screens as overvalued on a pure cash flow basis even after the sharp sell off.

The SWS DCF model projects a stream of future cash flows for the business, then discounts them back to today using a required rate of return to arrive at a single present value estimate per share.

For a capital intensive, early stage developer like Fermi with no established history of revenue or profits, that framework forces every assumption about grid build out, customer uptake and future margins to be anchored in relatively sparse financial evidence, which can pull fair value estimates lower until visibility improves.

Look into how the SWS DCF model arrives at its fair value.

Result: DCF Fair value of $5.66 (OVERVALUED)

However, several risks loom, including further project delays or funding setbacks, and the possibility that AI power demand ramps slower than Fermi's grid build out.

Find out about the key risks to this Fermi narrative.

Another View: Analyst Targets Paint A Different Picture

While our DCF work suggests FRMI looks expensive, the analyst price target of $29 implies more than a tripling from here. This signals that some on the Street still see significant upside. Is the market correctly pricing execution risk, or are analysts clinging to an outdated story?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Fermi for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 908 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Fermi Narrative

If you want to stress test these assumptions yourself and follow your own process, you can build a personalized thesis in minutes: Do it your way.

A great starting point for your Fermi research is our analysis highlighting 1 important warning sign that could impact your investment decision.

Ready for more high conviction ideas?

Before you move on, put the odds further in your favor by lining up a few more resilient candidates from the Simply Wall Street screener right now.

• Strengthen your growth watchlist with these 26 AI penny stocks that are building real products around AI rather than just talking up the theme.
• Lock in more dependable income by scanning these 13 dividend stocks with yields > 3% that can support your long term cash flow needs.
• Position yourself ahead of major structural shifts by reviewing these 80 cryptocurrency and blockchain stocks that could benefit as digital assets move further into the mainstream.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com