Datacentre company Firmus’s high flying valuation may be coming back down to earth ahead of expected ASX debut

Firmus Technologies, an AI datacentre company, is facing significant challenges ahead of its anticipated ASX debut, leading to speculation that its high-flying valuation may be coming back down to earth. Multiple sources indicate that the company is slashing its valuation or possibly shelving the initial public offering altogether.

Firmus is currently priced at nearly $44bn, a figure that has plummeted from $15bn just eight weeks ago and $1.85bn over a year ago. The original valuation was based on the company's potential to build and operate liquid-cooled "AI factories" equipped with Nvidia graphics processing units (GPUs). However, investors are now questioning whether they are paying too much for a company that is still in its start-up phase and has faced numerous operational obstacles.

Firmus has raised money from prominent investors, including Nvidia, Blackstone, Jane Street, and Coatue, but its high valuation has been criticized as fanciful. The company only has a handful of operational sites and numerous contracted and planned facilities, with 97% of its contracted revenue tied to sites that are not yet built.

This raises concerns about the feasibility of delivering on the promised revenue and sustaining the high valuation. Market sentiment surrounding Firmus is now believed to have entered the euphoric phase, as described by Morningstar analyst Lochlan Halloway, who warns that investors may be paying an excessively high price. The company's plans to list on the ASX on 23 October, in what was to be the largest IPO since Telstra in 1997, are now in jeopardy, with the price per share potentially being drastically reduced or the float being withdrawn altogether.