Tilray Brands TLRY stock is an important cannabis stock. Tilray is building itself into a world player. And, the eventuality is that Tilray Brands will be one of the best-competing cannabis stocks you can buy. Tilray management has a stated goal of achieving a cumulative $4B in revenue by the end of 2024, just a few quarters away. Given this rapid growth, I wanted to lay out the TLRY stock forecast and show that Tilray Brands will very likely move much higher.
Several years ago, when Tilray Brands first came out, TLRY stock shot up to approximately $315.00 per share. While I had been a Seeking Alpha contributor for some years (I am actually one of the original “Alphas”), during the early days of cannabis federal legalization in Canada, the euphoria and hype was getting out of control. I wrote many articles telling investors to sell TLRY stock at that level. TLRY stock has not seen that price point again. I do not expect that to happen any time soon, either.
Still, if you are a new investor into Tilray Brands, just looking to buy TLRY stock, in the long term, with current management, TLRY stock is likely to start a long slow move higher.
For my TLRY stock forecast and analysis, I am lowering my earlier projection. I looked at the earliest EBIT levels and thought it might be a stretch for this year and next. I believe Tilray may achieve break-even EBIT this year. And, I believe Tilray will continue higher gaining better margins. But, the initial numbers are likely to be lower than my earlier thoughts.
TLRY stock & Cannabis Federal Legalization
With cannabis federal legalization here in the United States about to happen, I expect that there will be a large surge in interest in cannabis stocks all over again. A whole bunch of people who are looking for a quick buck are very likely to rush in and start buying up cannabis stocks.
TLRY stock is a Nasdaq-listed cannabis stock. This means that far more individuals can access trading TLRY stock; not all brokerages allow for OTC stock trading, and it is my understanding that a few recent brokerages have disallowed trading in OTC stocks such as Fidelity.
Nonetheless, with TLRY stock being a Nasdaq-listed stock, there will be a lot deeper interest and volumes. When cannabis federal legalization does occur, look for TLRY stock to benefit from this to the upside.
But, I believe this move in TLRY stock will be fleeting. The moves upward from individuals not investing regularly in cannabis stocks are just looking for a quick buck. TLRY stock, along with all other cannabis stocks, are very likely to then come back down from this artificial level.
TLRY stock & Value Investors
Given that, if you are a savvy investor, looking at Tilray Brands, TLRY stock now could potentially be an excellent long term opportunity for a value investor.
Nonetheless, if TLRY stock does surge beyond rationale levels, you may want to get exit during the craze, and then build up another position when stocks settle back down. You could leverage this short term price distortion within a longer term outlook.
Subscribe to my channel
Tilray & HEXO
Tilray has recently entered into an agreement to acquire all of Hexo Corp.’s senior secured notes. Basically, this entails owning all of the debt of a company. By doing this, it enables Tilray to effectively control the company. This will allow Tilray to penetrate into the Quebec market where the laws state that any cannabis sold in Quebec must have been produced in Quebec. This is substantial in that Quebec is the second largest sized province by population size.
There are other aspects of the deal such as the increase in international exposure. Tilray will now have a 20% market share in Germany, an international country that I believe will be far bigger than most are crediting toward. It may be that the international exposure is what drives cannabis stocks further seeing that cannabis federal legalization is not moving forward in the United States.
Tilray Brands & MedMen Merger Potential
This is purely speculative, but, I can see the potential of Tilray Brands acquiring the rather beaten up MedMen MMNFF stock in its entirety. But, I can also see a bit of nefariousness in the deal.
When this deal was originally struck, I smirked a bit. Tilray has agreed to acquire 100% of MedMen’s senior debt outstanding. Why?
If a company declares bankruptcy, the senior debt outstanding is addressed: Not the shareholders. Shares outstanding basically become wallpaper… nothing more. Should MedMen, a company I have railed on many times, actually go into bankruptcy, shares outstanding are wiped out and MedMen settles with its creditors which, Tilray is now has that status… 100%. MedMen would “settle” with its creditors and agree to be acquired in exchange for the outstanding debt.
MedMen BK… done deal?
But, MedMen still has access to raising capital as it just raised some $100M. That won’t go too far however; MedMen is just one ginormous cash burn. So, going bankrupt is not necessarily a done deal.
But, the recent sale of New York-based dispensaries to Ascend Wellness was not exactly smooth. Ascend Wellness was to acquire dispensaries from MedMen. At the 11th hour, MedMen tried to back out. The timing was interesting. This “backing-out” happened just after Tilray Brands acquired all of the senior debt just prior to this. Could “backing-out” have been driven by the potential new owner of MedMen? Possibly.
Like I said, these moves are speculative. Now that the Ascend Wellness deal is done – MedMen settled – Tilray Brands now has the ability to acquire MedMen.. or, what’s left of it.
This would give Tilray Brands dispensaries throughout the United States which, this would be a solid foundation for entering into the United States.
Tilray Brands TLRY stock & Nasdaq Listing
Two things that I think are the most important things with cannabis investments right now: Being listed on Nasdaq and international exposure. TLRY stock will do very well because of its Nasdaq listing simply because many individuals can only trade Nasdaq listed stocks (Robinhood, for one) and as we see this potential surge in interest and activity from cannabis federal legalization, stocks trading on Nasdaq are going to see the lion’s share of volume. This will be something that helps to drive TLRY stock upward as individuals who basically have no clue what Tilray even is – other than being a cannabis stock – will rush in and buy the stock.
The other thing is international. I am making a very big deal over companies involved in international activity. But, by international, I mean companies outside of Canada & The United States. International Cannabis companies would be companies looking to get into German Cannabis legalization as well as Israeli cannabis legalization, and also Latin American cannabis legalization such as Mexico & Colombia, and others.
Tilray is poising itself to become an international player.
Tilray Brands TLRY Stock Financial Data
If you are new to considering TLRY stock as a potential investment, here I break down Tilray Brands latest financial data. I see Tilray Brands, TLRY stock, as a potential long term player. Currently, TLRY stock is beaten down considerably; as most cannabis stocks are.
And, while I like Tilray Brands TLRY stock a great deal, I have not added TLRY stock to my Top Picks and invested in the stock myself. I believe in Tilray Brands. But, I am well invested broadly in cannabis stocks across the board and do not need to add it to my personal portfolio.
Tilray Gross Profits
There are increases in revenue, albeit, modest. Tilray claims they will be continually increasing revenues to hit the $4B cumulative mark in the next 2 years. So, taking Tilray management’s word, investors should expect to see continual increases in revenue.
But, are these revenue increases organic or, are the increases in revenues owed to M&A activity that drives up revenue growth. This would be artificial. Already, Tilray has acquired Aphria in an all-stock deal and that nearly doubled revenue. So, will this be the continual pattern?
In the meantime, if there actually is organic revenue growth, look for improved gross margins owed to economies of scale. For now, gross margins are a little on the softer side. The broader stock market, the S&P 500, prints approximately 55% gross margins. But, the best cannabis stocks can hit anywhere from 65% to 75% gross margins, outstanding levels on a comparative basis. Tilray Brands will need to see this continued increase in organic revenue growth to achieve higher gross margins and gross profits.
Tilray TLRY stock Goals & Guidance
This would be the first real crux that Tilray Brands needs to achieve: Scaling up revenue via organic growth and achieving a higher level of economies of scale.
One thing to point out is the $4B cumulative mark that Tilray gave as a projection. When the report initially came out, many in the industry initially thought that Tilray was going to print $4B total for 2024. Nope. It was worded confusingly. Many of us got this incorrect. I have made adjustments accordingly, and that means my TLRY stock forecast is lower than initially stated.
Tilray Operating Profits
One of the hallmarks of the Aphria merger was cost savings. And, given the level look at operating costs, this appears to have been achieved. This shows that management is intently focused on cost savings; this is a focus that drives investor value and, TLRY stock will continually benefit from this.
In the meantime, if operating costs remain tight, and there are gains in revenue – organically, of course – this will ultimately improve this metric.
For now, operating efficiencies, the mathematical ratio showing the relationship of operating costs relative to revenue, is within the range of some of the best cannabis stocks.
First, for operating efficiencies, you want the lowest number you can because this is a ratio of cost versus revenue. The best cannabis stocks are printing between 30% – 35%.
Considering the bigger picture
However, the broader stock market where there are far more mature companies, have scaled up revenues far greater than where Tilray Brands is at this point, are printing approximately 17.5%. Tilray Brands, although they are focused on cost savings, they have some distance to go from here (Effectively, Tilray management needs to contain operating costs at this level while doubling company revenues).
In the meantime, being that Tilray Brands is so focused on cost savings, organic growth will get Tilray there. And, TLRY stock will continually advance with increased profit margins.
Tilray EBITDA & Net Earnings
Scaling up revenue, and benefiting from economies of scale, will increase gross margins as well as improve operating efficiencies relative to revenue. The diminishing of costs relative to revenue will drip downward to EBITDA and get Tilray Brands to better EBITDA levels. Improvements here will be what drives TLRY stock higher.
I look for improved and consistent EBITDA levels over the next 7 quarters. Even if Tilray Brands were to hit 10% more in gross margins, something that is far from being a stretch, this would add several million to the bottom line.
And, simultaneously, if Tilray Brands also added 10% in organic revenue with the same 10% gross margin advances, with the potential of 10% increase in operating efficiencies – assuming a static operating cost – a considerable amount trickles down to EBITDA profits as well as Net Earnings. And, TLRY stock has even more momentum pushing it upward.
With the TLRY stocks forecast, below, I lowered the earlier projection because I do not believe that Tilray will achieve very high levels of EBIT in the earlier years of the 5-year projection.
Tilray Cash On Hand
Relative to cash on hand, Tilray Brands has ample cash on a ratio basis compared to debt. And, if Tilray Brands were to hit net earnings consistently, adding positive free cash flow that could be used to add to this war chest, Tilray Brands possibility’s are improved significantly.
For now, Tilray Brands is well positioned in this regard. Tilray can look forward to seeing a continued increase in its cash on hand. And, future potential increases because of that which, that drives TLRY stock momentum even more.
Tilray Total Equity
I am a big believer that total equity is what drives the ability for a company to generate revenue. Cannabis companies need assets to be able to grow, process, and distribute cannabis. Total equity is, of course, the difference between total assets less total liabilities.
Given that, if there is ample, and growing, equity, the future capabilities of any one cannabis company will be shown in total equity. Tilray Brands has over $3B in total equity. And, that is moving higher.
Revenue growth will follow from this. And, profits will be driven from total equity.
Tilray TLRY stock Forecast & Analysis
Tilray TLRY Stock DCF
| Assumptions | |
|---|---|
| Tax Rate | 25% |
| Discount Rate | 8.000% |
| Perpetural Growth Rate | 25.0% |
| EV/EBITDA Mulltiple | 45.0x |
| Transaction Date | September 1, 2022 |
| Fiscal Year End | 12/31/21 |
| Current Price | $3.580 |
| Shares Outstanding | 590,281,045 |
| Debt | $1,029,300,000 |
| Cash | $490,600,000 |
| Market Value | |
|---|---|
| Market Cap | $2,113,206,141 |
| Plus: Debt | $1,029,300,000 |
| Less: Cash | $490,600,000 |
| Enterprise Value | $2,651,906,141 |
| Equity Value/Share | $3.5800 |
| Discounted Cash Flow | Entry | 2022 | 2023 | 2024 | 2025 | 2026 | Exit | |
|---|---|---|---|---|---|---|---|---|
| Date | September 1, 2022 | Dec 31, 2022 | Dec 31, 2023 | Dec 31, 2024 | Dec 31, 2025 | Dec 31, 2026 | Dec 31, 2026 | |
| Time Periods | 1 | 2 | 3 | 4 | 5 | |||
| Year Fraction | 0.33 | 1.00 | 1.00 | 1.00 | 1.00 | |||
| EBIT | $146,250,000 | $187,500,000 | $233,750,000 | $285,000,000 | $373,750,000 | |||
| Less: Cash Taxes | $36,562,500 | $46,875,000 | $58,437,500 | $71,250,000 | $93,437,500 | |||
| Plus: D&A | $22,750,000 | $26,250,000 | $29,750,000 | $33,250,000 | $40,250,000 | |||
| Less: Capex | $130,000,000 | $150,000,000 | $170,000,000 | $190,000,000 | $230,000,000 | |||
| Less: Changes in NWC | -$97,500,000 | -$112,500,000 | -$127,500,000 | -$142,500,000 | -$172,500,000 | |||
| Unlevered FCF | 1 | $99,937,500 | $129,375,000 | $162,562,500 | $199,500,000 | $263,062,500 | ||
| (Entry)/Exit | -$2,651,906,141 | $8,347,858,456 | ||||||
| Transaction CF | - 0 | $33,312,500 | $129,375,000 | $162,562,500 | $199,500,000 | $263,062,500 | $8,347,858,456 | |
| Transaction CF | -$2,651,906,140 | $33,312,500 | $129,375,000 | $162,562,500 | $199,500,000 | $263,062,500 | $8,347,858,456 |
| Rate of Return | |
|---|---|
| Target Price Upside | 187% |
| Internal Rate of Return (IRR) | 35% |
| Market Value vs Intrinsic Value | |
| Market Value | $3.58 |
| Upside | $6.70 |
| Intrinsic Value | $10.282 |
As I stated above, the $4B, the manner it was stated, confused a few of us out there, me included. Tilray is targeting $4B in cumulative revenue for all years up until the end of 2024. Tilray will not print $4B in 2024 alone.
Given that, I took a solid look at TLRY stock and revenue growth projections to get Tilray to achieve the $4B. Plus, I took a solid and realistic look at EBIT numbers that Tilray is likely to print in the coming quarters. Given this, the previous stock projection of some $35.00 is not feasible.
Here is something else that is important to note: The TLRY stock forecast encompasses Tilray Brands today as the company is today. However, Tilray is an aggressive company that will continue to expand its footprint through M&A activity and, very likely, I will have to adjust the TLRY stock forecast upward as we move forward.
Tilray EBIT levels
I started out a bit softer on Tilray with EBIT. I do not think they really get too far ahead of themselves with break-even and EBIT. Then, progressively I pushed Tilray’s numbers upward over the next following years.
Given this, I am looking for Tilray to hit the target of $22 and, essentially, TLRY stock should be at this level right now. But… stock investing is a popularity contest of which, cannabis stocks are not winning.
Is Tilray TLRY stock a good investment?
Management at Tilray is demonstrating that they will make big leaps toward containing costs. They are getting creative with this such as the Aphria merger which, that has cut a lot of costs right there. Look for continued cost metric improvements as Tilray prints progressively higher and higher revenues. This will create economies of scale that will push gross margins.
As well, Tilray will likely hit 17.5% in operating efficiencies at some point in its future. So, the current levels are a far cry from the potential of Tilray. Astute investors will recognize this and start to acquire TLRY stock.
I do not own TLRY stock. And, I do not expect to own TLRY stock. Mostly, this is because I have many other stocks in the industry and I expect these stocks to move higher over the course of time. Some, I think will outpace TLRY. For my own portfolio, look to the Best Cannabis Stocks – My Top Picks.
Longterm, TLRY stock is likely to push to $50.00 – $100.00 during the next few years. Given the current price, that is significant gains.
Excellent!!!
Here is a quote from a news release today. I think its the CEO.
“One day I hope to be holding a bourbon that’s infused with THC instead of alcohol,” he said.
It’s comments like that, and potential in countries like Germany, that make me think, cannabis is going to replace alcohol to some extent over the next few decades.
I’ve been following Tilray since before Tilray was formed. Brenden Kennedy, former CEO of Tilray, formed a company called Privateer Holdings. Privateer Holdings owned many companies within this parent company: Leafly.com, Marley Naturals, and Tilray just to list a few. When Tilray went public at $17 per share, the share price shot up due to $300 due to couple reasons:
1) Over Exuberance
2) Historic Short Squeeze. I read an article about naked short squeeze in Canada – wish I could find this article. Tilray was being attacked by a famous short in Canada. But this famais short got his head handed to him when Tilray shot up to $300 per share. It was a great article, included interview with Brenden Kennedy. Article was long and detailed – wish I could find it again. As I recall, article described naked shorting as illegal in Canada. Tilray ultimately came all the way back down to the $2 range, before eventually shooting back up to $72 intraday. Now here we are again, back down to $3 range. The money we could have made with Tilray – if only we knew ahead of time ☺️
@Edward When Tilray went public, and the stock shot up above $300, I was contributing to Seeking Alpha at the time. I wrote many, many articles saying the price would drop. Had no idea it would be so outlandish that the price where it is now; the complete opposite end of the spectrum. But, we will get there.
In the meantime, I can think of no company that is making massive moves such as Tilray throughout the world. They will be the biggest players.
I’m very tempted to back up the truck on Tilray at these levels. However, I’m also looking at a cannabis ETF that focuses on US MSO’s. ETF’s allow me to sleep at night. Only cannabis stock that I’ve loaded up on this far is BBRRF as you know. One thing that makes me baulk at the US MSO’s is the Fed law restricting the export of cannabis/extracts to other states/countries. Being able to export out of Canada has given Tilray a huge leg up. However I’ve noticed that Tilray’s outstanding shares has doubled since their merge with Aphria. Also the contracts with 2 failing cannabis companies, Hexo and Medmen, make me very nervous. These 2 cavalier contracts could eventually be viewed as genius, or it could drag TLRY down with them. So I’m on the fence about Tilray.
I’m very tempted to back up the truck on Tilray at these levels. However, I’m also looking at a cannabis ETF that focuses on US MSO’s. ETF’s allow me to sleep at night. Only cannabis stock that I’ve loaded up on thus far is BBRRF as you know. One thing that makes me baulk at the US MSO’s is the Fed law restricting the export of cannabis/extracts to other states/countries. Being able to export out of Canada has given Tilray a huge leg up. However I’ve noticed that Tilray’s outstanding shares has doubled since their merge with Aphria. Also the contracts with 2 failing cannabis companies, Hexo and Medmen, make me very nervous. These 2 cavalier contracts could eventually be viewed as genius, or it could drag TLRY down with them. So I’m on the fence about Tilray.
An analyst at Benchmark just downgraded Tilray to sell with a price target well below it’s current price. He cited a number of issues including loss of market share and oversaturation both in the Canadian market. I’m sure he has some valid points and obviously differing opinions are what makes a market however if and when big companies like Aurora and Canopy bite the dust the surviving companies pick up their marketshare. It all sounds very bleak when you read their analysis but it also sounds like shorter term thinking.
HealthcareConsumerTilray downgraded to sell at Benchmark as ‘corporate cannabis’ in downturnJul. 29, 2022 10:36 AM ETTilray Brands, Inc. (TLRY), ACB, CGC, CRONHEXO, SNDL, OGI, YOLO, CNBS, MJ, MSOS, POTX, TLRY:CA, ACB:CABy: Jonathan Block, SA News Editor16 Comments0 seconds of 1 minute, 20 secondsVolume 0%01:0301:2001:20
Note: The above video features Alan Brochstein of 420 Investor discussing the potential of a cannabis bull market.
Benchmark has downgraded Tilray Brands (NASDAQ:TLRY) to sell from buy as the company’s fiscal 2022 Q4 results indicated the cannabis licensed producer is continuing to lose market share in Canada.
The firm sees dark clouds over the Canadian cannabis industry overall. “We are not convinced ‘corporate cannabis’ can create compelling products or brands in Canada.”
The firm lowered its price target to $3 (~18% downside based on Thursday’s close)
Analyst Mike Hickey said that the cannabis market in Canada is facing several headwinds. Among them are oversupply and pricing compression, poor prospects for international growth, and unlikely legalization of marijuana in the U.S. in the near term.
As a result, this leaves “limited operational options and hollowing the implied strategic value of any U.S. cannabis acquisitions.”
Hickey noted that 46% of cannabis is distributed through the black market, “a systemic issue that could be hard to remedy.”
Canadian cannabis names: Canopy Growth (NASDAQ:CGC), Aurora Cannabis (NASDAQ:ACB), HEXO Corp. (HEXO), Sundial Growers (SNDL), OrganiGram Holdings (OGI), and Cronos Group (NASDAQ:CRON).
Cannabis-related ETFs, AdvisorShares Pure Cannabis ETF (YOLO), Amplify Seymour Cannabis ETF (CNBS), ETFMG Alternative Harvest ETF (MJ), AdvisorShares Pure US Cannabis ETF (MSOS), and Global X Cannabis ETF (POTX).
On July 26, a U.S. Senate subcommittee hearing discussed marijuana legalization.
Now Read: Tilray Brands, Inc. (TLRY) CEO Irwin Simon on Q4 2022 Results – Earnings Call TranscriptGet alerts onTLRY – Tilray Brands, Inc.
Follow137.24K Followers
7/31/23 TLRY is also one I track and today’s 2.53 high is already showing as a short term top with a sell signal. The closest low end target below is 1.62. So you can go all the way out to Aug 25th expiry and buy $2 strike puts at $10 bux each or less. TLRY is now at 2.46…”live!” If it trades back up through 2.50 I am going to step up to some puts since the math for the 8/25/23 expiry says it’s a “potential” 4X trade. Here’s the 10 day 15 minute TLRY chart showing the short term top and sell signal. Another rally from a pullback to appx 2.45 and through 2.50 would generate a deadly double sell signal. My current long term buy target for TLRY is .94. https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=tlry&x=26&y=18&time=18&startdate=1%2F4%2F1999&enddate=8%2F6%2F2022&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1024&lf2=2&lf3=0&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
8/18/23 12:04PM TLRY update: I’m still holding TLRY $2 strike calls that expire next Fri, 8/25/23 but I added puts to the 2.50 strike today for 8/25/23 expiry. At $5 bux each and an established target below at 1.62 (“before” good news sent TLRY into an upside frenzy), I still love the TLRY short trade, even though I generally do not short yearly lows. https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=tlry&x=14&y=8&time=18&startdate=1%2F4%2F1999&enddate=8%2F6%2F2022&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1024&lf2=2&lf3=0&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
Hmmm… I just looked at the $5.00 calls last night, about 2 months out. My expectation is that we see something big announced sometime in October. That would light up these $5.00 calls big. I am planning to wait about two more weeks and get in on these calls – along with a slew of others long-dated, deep out of the money, with the idea that there is going to be a solid announcement sometime in October.