Shares of Fermi Inc. (FRMI) cratered 14.6% to $6.25 on July 10 after the company priced an upsized $375 million convertible senior notes offering — bonds that can later be swapped for stock — bearing a 5.00% interest rate and maturing in 2031. The stock had already sunk 18% in after-hours trading on July 9 when Fermi initially announced a $350 million offering. The final deal was bigger than planned and lands on a company that has zero revenue and is burning cash at a staggering rate, raising the stakes for shareholders who are already down roughly 80% over the past year.

  • The Deal Got Bigger Overnight, and So Did the Dilution Risk. Fermi priced the upsized offering at $375 million, plus an option for initial purchasers to buy an additional $56.25 million — potentially pushing total debt from this single deal to $431 million. The initial conversion rate implies a conversion price of about $9.52 per share, a 30% premium to the July 9 close of $7.32. If the stock ever reaches that price, noteholders can convert their bonds into roughly 39.4 million new shares, diluting existing owners. At $375 million in face value, the company also owes $18.75 million a year in interest — a heavy burden with no revenue coming in.

  • Capped Calls Are a Band-Aid, Not a Cure. Fermi entered capped call transactions that raise the effective conversion price to $14.64 per share, aiming to avoid dilution below that level.

Roughly $30–$34.5 million of the net proceeds will fund those capped calls , which means nearly a tenth of the cash raised goes straight to hedging costs rather than building the business.

  • A Pre-Revenue Company with a Billion-Dollar Burn Problem. Fermi reported a net loss of $486.3 million for fiscal 2025 and carries $0.00 in trailing twelve-month revenue.

InvestingPro analysis shows negative free cash flow of $1.05 billion. The convertible raise buys time, but at 5% interest on top of existing debt, it tightens the financial vise if its flagship AI power campus doesn't start signing paying tenants soon.

  • Governance Chaos Adds Another Layer of Uncertainty. Fermi and ousted co-founder Toby Neugebauer have been locked in an escalating dispute, with Neugebauer pushing for a special meeting while the board adopted a 70% supermajority bylaw.

Neugebauer has argued that a tenant contract signed under unresolved governance turmoil is harder and more expensive to finance — a point that now cuts deeper with $375 million in new obligations on the balance sheet. With 637.6 million shares already outstanding , investors face a company fighting on two fronts: a boardroom battle and a race to convert ambition into cash flow before the money runs out.