Freight Technologies’ Reverse Split: A Desperate Gamble or a Strategic Comeback?

Investors, buckle up! Freight Technologies (NASDAQ: FRGT) is pulling another reverse stock split—a 1-for-4 move set for May 27—to stave off delisting. But let’s cut through the noise: is this a lifeline for survival or a last-ditch attempt to paper over crumbling fundamentals? The answer might just be the latter. Let’s dive in.

The Split’s Survivalist Stance

This isn’t Freight’s first rodeo. Just last September 2024, the company executed a 1-for-25 reverse split to prop up its stock price after a catastrophic 94% decline in the past year. Now, with shares hovering near $0.25—a far cry from Nasdaq’s $1 minimum bid price—here we go again. The math is simple: the split will slash outstanding shares from 9.1 million to 2.2 million, artificially inflating the price to around $1. But here’s the rub—this is compliance theater, not a growth strategy.

The Tech Narrative: Shiny Tools, Hollow Balance Sheets

Freight’s pitch? A tech-driven logistics revolution, with platforms like Fr8App and Waavely. They’ve even partnered with Bayer Crop Science to integrate their systems, and they’re buying up crypto tokens (like FET and Trump tokens) to “diversify.” Sounds cutting-edge, right? But here’s the reality: the company’s market cap is a paltry $6.5 million, and it’s burning cash while posting a negative gross margin of 26%. You can’t digitize your way out of that.

The Reverse Split Playbook: A Losing Hand?

Let’s talk data. Reverse splits are rarely a cause for celebration. Historically, companies that resort to them often see further declines. Why? Because the splits mask the problem instead of fixing it. Investors know splits don’t address cash burn, poor margins, or stagnant revenue. Freight’s 2024 split? Its stock is still down 87% since then.

The Red Flags That Won’t Fade

• Fractions and Frustrations: Shareholders holding odd lots (like 1.3 shares post-split) will see fractions rounded up or down. Not a big deal? Sure, unless you’re a small investor getting stiffed.
• Regulatory Risks: The SEC filing warns of potential delisting if they can’t sustain the $1 price long-term. Even this split might not be enough.
• Tech Hype vs. Reality: Those crypto investments? They’re more of a distraction than a solution. A $2 million bet on Trump tokens? Let’s just say it’s not the kind of “diversification” that’ll turn around a company.

The Bottom Line: Caution, Not Celebration

Freight Technologies isn’t just playing defense—it’s losing the game. The reverse split is a necessary evil to stay on Nasdaq, but it doesn’t fix the core issues: cash burn, negative margins, and a tech strategy that’s all sizzle with no steak. Unless they show a sustained path to profitability—like turning that gross margin positive—this stock is a huge risk.

Action Alert!

Investors, don’t be fooled by the split’s temporary price boost. This isn’t a comeback story—it’s a survival story. Stick to the sidelines unless Freight can deliver concrete evidence of turning its business around. Until then, this is a stock to avoid.

Stay vigilant, stay smart. This isn’t a free lunch—just a last bite of a sinking ship.