Tilray (NASDAQ:TLRY) stock had an eventful 2021. From a price perspective, it has simply been on a prolonged skid.
To many, this represents an opportunity. After all, Tilray is a large player in the cannabis market.
Questions remain about whether the market will take off en masse after much unfulfilled promise, but if it does, TLRY stock is in prime position to benefit.
Further, Tilray has provided strong expectations for its followers. Those expectations came in the form of a $4 billion revenue goal by 2024 outlined back in August by CEO Irwin Simon. For bullish investors, that’s a great place to start.
The basic premise underlying Tilray’s success in ramping up to $4 billion in revenue over the next few years is expansion. Tilray merged with Aphria back in May of 2021.
In addition, Tilray is growing its brands and businesses in Canada, the U.S., and Europe. That’s the idea: Acquisitions and expansion in order to reach $4 billion by 2024.
That’s all well and good, but $4 billion does seem to remain a lofty goal at this point.
Investors have to consider the numbers and what it will take in order to reach such a high revenue threshold in a few short years.
A Closer Look at TLRY Stock
The truth is, Tilray is a long way from CEO Irwin Simon’s stated goal. To understand why, we need to simply look at recent earnings and extrapolate from there.
Back in early October Tilray released its fiscal year 2022 Q1 earnings report. The good news regarding revenues was that they increased to $168 million, up 43% on a year-over-year basis. So, Kudos to Tilray. It isn’t shying away from a rush toward expansion along the top line.
But we have to understand that progress within the context of the larger goal of reaching a $4 billion top line in 2024. The analysts tracking Tilray closely believe it should report roughly $242 million in revenue this quarter and just shy of $1 billion in revenues in the current fiscal year 2022.
Given that Tilray reported $513 million in 2021 revenues back in July when its fiscal year ended, there’s reason to be cautiously optimistic.
Doubling Could Work
The analysts following Tilray expect it to perhaps double its 2021 revenues in fiscal 2022. That means that it is possible for Tilray to reach $4 billion in 2024 if its trajectory continues as it has.
In other words, it doubles in 2022 to reach $1 billion in revenue. That $1 doubles again in 2023, reaching $2 billion, and then again in 2024 to hit the stated $4 billion goal.
It’s bullish, yes, but it’s possible. On the one hand, it’s easier to achieve revenue growth from a smaller revenue base. So, it is bullish to expect that Tilray can simply maintain its trajectory and hit growth goals while expanding its revenue base.
Tilray has been diversifying and growing quite quickly. It could reach a tipping point at which its scale simply takes over. To that point, Tilray recently purchased Breckenridge Distillery which is a spirit producer known for bourbon and other hard alcohol.
What to Do
I’ve certainly been critical of Tilray in the past. The cannabis industry has mostly disappointed over the longer term. Many have simply given up on any and all firms in the space. I don’t necessarily disagree with them, but Tilray makes sense within the space.
It is so beat down now that any resurgence in pot stocks will send it much higher. For risk tolerant investors there is inherent potential.
Right now the entire industry is in a stage of gobbling up all things cannabis-related. Tilray’s size at least makes the strategy sensible in that it could see massive scaling advantages in the future.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
