The rout in Fermi’s (FRMI) shares deepened on Monday afternoon following an attack from activist short-seller Fuzzy Panda Research, which took a short position in the startup data center developer. According to the anonymous group, “Fermi is not a field of AI dreams… it’s a field of dirt.”
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Fermi’s shares started to sink last Friday following the exit of Toby Neugebauer, tumbling further in Monday’s pre-market session even though the company launched its “Fermi 2.0 strategic evolution” plan in response to the selloff.
Fuzzy Calls Fermi’s Plan ‘A Mirage’
For context, Fermi is a Texas-based company that operates as a real estate investment trust (REIT) and went public in November at a valuation of almost $15 billion. The company was co-founded by American politician and former U.S. energy secretary, Rick Perry, entrepreneur Toby Neugebauer, and co-founder of Grey Rock Investment Partners Griffin Perry.
The company’s goal is Project Matador, under which Fermi is aiming to build a massive data center campus in Amarillo, Texas. The project is also known as the President Donald J. Trump Advanced Energy and Intelligence Campus.
In its short report, Fuzzy Panda said it engaged in six months of digging into Fermi and uncovered “serious allegations of fraudulent transfers and misappropriation of assets” against both Neugebauer and his “Yes men” that remain part of the company’s C-suite team. This allegedly includes Miles Everson, current chief financial officer, who the short-seller alleged helped Toby to divert $8.7 million for phantom services.
The activist short-seller also described the company’s management team as “inexperienced” and further alleged that Neugebauer was fired from the company rather than just departed. It also called the Fermi 2.0 response a “mirage.”
Fermi Is ‘Running Out of Money’
In a YouTube video attached to the report, Fuzzy also noted that “Fermi’s project is a field of broken dreams”. It added that its drone flew over Fermi’s data center campus site in Amarillo and found “an empty, dirt field with some rebar and pipes lying around.”
Still in the video, the activist short-seller noted that while Fermi said its massive AI data center will be powered by nuclear reactors and gas turbines, “in reality, Fermi’s site is still a patch of dirt that is running out of money.”
The research firm contended that the inexperience of the team and the multiple fraud allegations explain why a key backer in December pulled out of funding Project Matador, causing the stock to crash by 34%.
Is FRMI a Good Investment?
On Wall Street, analysts have a Strong Buy consensus rating on Fermi’s shares based on six Buys issued over the past three months. Moreover, the average FRMI price target of $20.20 suggests about 284% upside from current trading levels.
