How will the reverse split affect the number of shares outstanding and the company’s market capitalization?

Effect on Shares Outstanding and Market Capitalization

A 1‑for‑7 reverse split means that for every seven existing ordinary shares of Foresight Autonomous Holdings (FRSX) that an investor holds, they will receive one new share. Consequently, the total number of shares outstanding will be reduced to roughly 14 % of the pre‑split count (i.e., divided by seven). Assuming the market values the company’s equity unchanged at the moment of the split, the total market capitalization (share price × shares outstanding) should remain roughly the same immediately after the split. In practice, the market cap can drift slightly up or down due to the “psychological” effect of a higher per‑share price (often perceived as “more respectable” for institutional investors) or the cost‑of‑trading (higher price can reduce the number of round‑lot orders). However, any change in market cap would be driven by investor sentiment and liquidity, not by the arithmetic of the split itself.

Trading Implications

• Liquidity and price‑level: The post‑split price is expected to be about 7 × the pre‑split price (e.g., a $3.00 pre‑split price → roughly $21.00 after). This may attract investors who have minimum‑price thresholds for buying (e.g., institutional mandates) and could improve the stock’s eligibility for certain indices or funds that exclude low‑priced stocks. However, the reduction in share count can also tighten the order book, leading to wider bid‑ask spreads and higher intraday volatility on the first few trading sessions.
  
• Technical perspective: Expect a sharp, mechanical price jump on the split date (August 24‑25) that does not reflect a change in fundamentals. Traders should adjust their charting (e.g., re‑scale the y‑axis or use split‑adjusted historical data) to avoid misreading support/resistance levels. The “price‑jump” can trigger stop‑losses or algorithmic thresholds, so be prepared for a brief spike in volume and a possible short‑term over‑reaction.
  
• Actionable strategy: Consider holding the position through the split if you are a long‑term believer in Foresight’s 3‑D perception technology; the reverse split does not dilute ownership. If you are a short‑term trader, monitor the opening price and early‑session volume. A price that settles within 5‑10 % of the theoretical 7× price suggests a clean split; any deviation larger than that could indicate market‑wide sentiment shifts (e.g., concerns about dilution, upcoming news). Position sizes should be adjusted for the new share count, and stop‑loss levels should be recalibrated to the higher price scale. Keep an eye on the post‑split share float—if it falls below 10 million shares, the stock may become more volatile, so a tighter risk‑management framework is advisable.