Shares of Fermi tumbled sharply on Monday after the company announced the departure of Chief Executive Toby Neugebauer, triggering investor concerns about leadership stability at a critical stage of its expansion.

The stock fell as much as 23% to around $5.03, extending its year-to-date decline to roughly 18% as of last week’s close.

The leadership shake-up comes as Fermi works to secure tenants for its ambitious Project Matador data center campus in Amarillo, Texas.

Leadership shake-up rattles investors

Neugebauer’s exit follows months of internal discussions, with analysts noting that the board had been considering a leadership change for at least three months.

While the company did not provide a specific reason for the departure, it said the transition would not affect its ability to deliver power capacity or sign customers.

The changes extended beyond the CEO role. Chief Financial Officer Miles Everson also resigned and was subsequently appointed to the board after a Neugebauer family trust exercised its nomination rights. The move expanded Fermi’s board to seven members from five.

Additionally, the company appointed Jeffrey S. Stein, managing partner at Breakpoint Advisory Partners, to fill the newly created board seat. Neugebauer will remain on the board despite stepping down as CEO.

Fermi said it has formed an interim office of the CEO, consisting of Chief Operating Officer Jacobo Ortiz Blanes and board adviser Anna Bofa, while it conducts a search for a permanent replacement with the help of Heidrick & Struggles.

Project Matador remains a key focus

The leadership transition comes as Fermi faces challenges in advancing Project Matador, a large-scale data center development spanning 7,570 acres in Amarillo.

The company, co-founded by former US energy secretary Rick Perry, aims to build what it describes as the world’s largest data center at the site.

A key hurdle has been securing a cornerstone tenant, which is critical for moving the project forward.

Following the leadership change, Fermi told analysts it had accelerated discussions with potential customers and re-engaged lease negotiations for the campus.

The company emphasized that the CEO transition would not disrupt its operational plans, particularly around power delivery and tenant acquisition.

Analysts see potential upside despite turmoil

While the market reaction was negative, some analysts view the leadership change as a potential positive for the company’s long-term prospects.

“In our view, this indicates that there was friction between customers and Mr. Neugebauer, and negotiations could be simpler going forward,” wrote analysts at Stifel in a research note Sunday. “While shares likely weaken on the headline, we believe this could be a plus for FRMI.”

Stifel reiterated its Buy rating on the stock with a $29 price target, suggesting significant upside from current levels.

Analysts at Evercore also struck an optimistic tone. “Overall, we view this transition as changing the ‘tone at the top’ but maintaining the same tenacity and vigor the industry has seen from an operational perspective,” wrote Evercore analyst Nicholas Amicucci, who maintained an Outperform rating and a $20 target.

Fermi said it is evaluating candidates for an interim CFO role and expects to make an announcement in the coming week. Analysts added that the board is likely seeking a new CEO with experience in data centers, power infrastructure, and public markets.

Despite the near-term uncertainty, the company’s ability to execute on Project Matador and secure key tenants will remain central to its investment case in the months ahead.

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