FRVO · Fervo Energy
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $16
Updated ·
Price against the kill line
28.1% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $16.00, set on 12 November 2026. The shares are down 36.4% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $16, well clear of the 50-day moving average, which would show buyers absorbing the shares unlocked on 9 November 2026 and the shares leading; or Google exercising its option for about 600 MW more at Cape Station.
Research onlyNot in the portfolio.
Key figures from the filings · Utilities
Quarter to 30 September 2026, filed 10 November 2026
- Revenue, latest quarter ($M)
- 0.1
- Revenue, change on a year (%)
- +110.9
- Gross margin (%)
- −1181.0
- Operating margin (%)
- −37712.1
- Net cash, cash less debt ($M)
- 1,615
All filed numbers
What Fervo Energy reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| filed | 0.1 | +110.9 | −1181.0 | −37712.1 |
| filed | 0.1 | — | −170.8 | −25435.4 |
| filed | 0.1 | — | −690.2 | −32872.1 |
| filed | 0.1 | — | −558.2 | −24834.5 |
| filed | 0.0 | — | — | — |
| Pre-tax income ($M) | −18.3 |
| Net income ($M) | −19.5 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +3205.1 |
| Operating cash flow ($M) | Not available |
| Capital spending ($M) | Not available |
| Free cash flow ($M) | Not available |
| Cash and short-term investments ($M) | 1,917 |
| Debt ($M) long-term debt | 302 |
| Net cash, cash less debt ($M) | 1,615 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | Not reported |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 2,791 |
| Market value ($M) | 3,393 |
| Enterprise value, market value plus net debt ($M) | 1,778 |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | Not available |
| Price to book value (×) | 1.2 |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 13 November 2026): 8.0% of shares outstanding sold short, 2.5 days of average trading to cover, −8.2% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $0 |
The thesis
Fervo Energy shares look more likely to lag the S&P 500 over the next three months. A $11.9 billion contracted backlog is set against two things: roughly 200 million Class A shares released from the IPO lock-up on 9 November 2026, and brokers that keep cutting price targets after the third-quarter report. What settles it is whether Cape Station's GeoBlocks 2 and 3 reach commercial operation by 1 January 2027, as the company guided on 9 November 2026, and whether the first full quarter of power sales shows the plant performing.
The rating is Low because the contracted business is real but the shares lack a near-term driver to outrun the index. On 11 November 2026 the shares closed at $12.94. That is below the $27 price of the 12 May 2026 initial public offering (IPO) and follows a 36.3% fall over three months. The market is now pricing execution risk and new share supply more heavily than a backlog that rose 65% in a quarter.
Bullish and bearish views on Fervo Energy Company
The bull case on Fervo Energy Company (FRVO), in brief: Google contract lifted backlog to $11.9 billion. The bear case: lock-up release adds share supply.
Bull case
- Google contract lifted backlog to $11.9 billion. The company's 9 November 2026 results release put contracted revenue at about $11.9 billion, up from about $7.2 billion. Binding power purchase agreement (PPA) capacity rose to 1,054 megawatts (MW) from 658 MW. The 396 MW Google deal announced on 1 September 2026 is a 15-year take-or-pay contract with an option for about 600 MW more.
- First commercial power arrived early. The 33 MW GeoBlock 1 at Cape Station in Utah entered commercial operation on 30 September 2026, ahead of its contractual date, according to the company. GeoBlock 2 is synced to the grid and delivering test energy. GeoBlock 3 is mechanically complete.
- Cash covers the near-term build. Unrestricted cash was $1.92 billion and total debt $301.6 million at 30 September 2026, per the third-quarter release. Second-half 2026 capital spending guidance fell to $700–750 million from $850–900 million. The company says construction efficiencies moved some spending later and total investment is unchanged.
- Cost per kilowatt is guided lower. The company expects GeoBlocks 1–3 to cost about $7,000 per kilowatt (kW). It targets $5,500/kW for the 400 MW Cape Google expansion and $3,000/kW over the long term (9 November 2026 release).
Bear case
- Lock-up release adds share supply. The IPO lock-up on about 200 million Class A shares expired on 9 November 2026, according to a TIKR analysis updated 8 November 2026. That supply arrives while the shares are already down 36.3% over three months.
- Brokers cut targets after the results. Baird lowered its target to $20 on 10 November 2026 and kept Outperform. BofA Securities cut its target to $25 from $30 on 12 November 2026 and kept Buy. Both firms cut even after a quarter that delivered the Google backlog.
- Revenue is still close to zero. Third-quarter revenue was $116,000, against an analyst estimate of $165,375 reported on 9 November 2026. The operating loss was $43.7 million and general and administrative expense was $39.4 million, up from $27.4 million in the second quarter. Consolidated net income of $11.7 million depended on a $29.9 million tax benefit and an $11.8 million non-cash swap gain.
- A short seller challenged the plant's performance. Morpheus Research published a report on 6 October 2026 alleging water loss, earthquake damage and rising costs at Fervo's plants. The company called the claims "selective and outcome-driven characterizations of early-stage pilot data." The third-quarter release gives no well performance figures.
- Spending accelerates before revenue does. The company guided fourth-quarter 2026 capital spending at $450–500 million, up from $256.7 million in the third quarter. The 400 MW Google expansion is not expected to deliver first power until mid-2028.
Price setup
The shares closed at $12.94 on 11 November 2026. The 50-day moving average of adjusted closes stood at $12.83 that day, so the price sits just above it. Over three months the shares fell 36.3%.
The IPO priced at $27 on 12 May 2026. The shares have traded below that level as the Morpheus report (6 October 2026), JPMorgan's cut to $27 from $38 (19 October 2026) and the lock-up release (9 November 2026) came through. A move well clear of the 50-day average while the unlocked shares trade would show buyers absorbing the new supply. Closes below the average would point to the lock-up selling still running.
Catalysts ahead
- ~1 January 2027 (est.): Company-guided commercial operation of Cape Station GeoBlocks 2 and 3, completing Phase I of about 100 MW. Meeting the date would test the short-seller claims against operating results. A slip would add to the execution doubts already priced in.
- ~10 March 2027 (est.): Q4 and full-year 2026 report, the first full quarter of Cape Station power revenue. This is the first quarter in which revenue and plant output can be checked against the company's prior expectations and the $11.9 billion backlog.
What would change the view
A daily close above $16, well clear of the 50-day moving average, which would show buyers absorbing the shares unlocked on 9 November 2026 and the shares leading; or Google exercising its option for about 600 MW more at Cape Station.
What it trades with
The shares trade mostly on company events rather than with the broad market. On 1 September 2026 they jumped intraday on the Google PPA, and on 6 October 2026 the short-seller report hit them. On 9 November 2026 company news reported the shares rising on the day of the results and the lock-up expiry, a session in which the Nasdaq 100 rose 3%. The business is tied to demand for round-the-clock power from data centres through the Google contract, so sentiment toward AI power suppliers can move the shares. The company's own results and plant milestones decide the three-month path more than the index does.
Notes
- Fervo Energy listed on Nasdaq on 13 May 2026 after pricing its IPO at $27 per Class A share on 12 May 2026.
- The IPO lock-up on about 200 million Class A shares expired on 9 November 2026, per a TIKR analysis.
- Consolidated net income differs from the result attributable to common stockholders: in Q3 2026, $11.7 million versus a $20.8 million loss.
The evidence, claim by claim (8)
- Contracted revenue backlog about $11.9 billion, up from about $7.2 billion; binding PPA capacity 1,054 MW, up from 658 MW Fervo Q3 2026 results release, 9 November 2026 · as of
- Q3 2026 revenue $116,000; operating loss $43.7 million; G&A $39.4 million versus $27.4 million in Q2 Fervo Q3 2026 results release and 10-Q · as of
- Unrestricted cash $1.92 billion and total debt $301.6 million at quarter end Fervo Q3 2026 results release · as of
- Q4 2026 capex guided at $450-500 million; H2 2026 capex guide cut to $700-750 million from $850-900 million Fervo Q3 2026 results release, 9 November 2026 · as of
- 33 MW GeoBlock 1 at Cape Station entered commercial operation; GeoBlocks 2 and 3 guided to commercial operation by 1 January 2027 Fervo Q3 2026 results release, 9 November 2026 · as of
- Morpheus Research short report alleged water loss, earthquake damage and rising costs at Fervo plants; company disputed it TIKR analysis citing Morpheus Research report of 6 October 2026 · as of
- BofA Securities cut its price target to $25 from $30 and kept a Buy rating BofA Securities note reported 12 November 2026 · as of
- Baird lowered its price target to $20 and kept an Outperform rating Baird note reported 10 November 2026 · as of
Sources
- Fervo Energy Reports Third Quarter 2026 Results · greenstocknews.com ·
- Fervo Energy Just Dropped 35% in a Month. Is It Time to Sell, or Load Up? · tikr.com ·
- Fervo prices above range at $27, raises $1.89B · axios.com ·
- whbl.com ·
- FRVO Q3 Earnings Call Highlights Google Deal and Geothermal Expansion · zacks.com
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