Since the announcement at the end of August from HHS that they are recommending cannabis be rescheduled to Schedule III, TLRY initially shot up with all cannabis stocks, but, and in line with all other cannabis stocks, TLRY stock has slid right back downward. The selling is getting harsh. It is significantly unwarranted, if you ask me. But, those that are playing stocks within this industry are pushing hard to get this done. Likely, these players are taking advantage of the opportunities within the industry’s stocks where there is a low amount of volume with little in the way of individuals wanting to get in and push stocks upward. Most investors are invested already. So, no new buyers are showing up.
In the meantime, Tilray continues to build a solid business and is continually getting closer to profitability.
There were sizable gains in the latest two quarters. But, Tilray saw a decline over the latest quarter over quarter. Nonetheless, the drop lower is still much higher revenue gains the previously printed. I would want to see a few more quarters to see how Tilray is improving overall.
But, projected revenue show that there will be sizable gains throughout the year which would be roughly $205M per quarter, more than what was just printed this quarter.
The 2024 projected revenue is set for $813M which averages about $205M per quarter. This quarter, Tilray printed $176M. So, there is upside expectations for revenue gains. Then, Tilray is expecting an additional 25% increase in revenues the following year. With more and more revenue gains, this will help Tilray get to profitability and improve its metrics.
The very first major metric that a new company is working toward is EBITDA profitability. If a new venture can show that core company costs are being paid with a level of revenue, then all that needs to occur is scaling up the business to increase profits further with marginal profits via marginal revenue.
At this point, Tilray is at that break-even point where all they need to do is continually increase their sales and bring in additional revenue. This will add further gains to profits because the core, fixed costs are already covered with what is being sold.
Therefore, with the increase in revenue, net earnings will begin to show up along with higher and higher EBITDA profits.
Equity should maintain these levels. If Tilray continues to build up profits then they will not have to add on more debt to continue operations. That will be a positive, obviously. Next would be that TLRY stock could increase total equity and then leverage it to grow the business even further.
In the long run, with Tilray achieving necessary milestones, if they can actually print their revenue increases they are looking to hit in 2024, with marginal profits, they are likely to also be profitable net earnings. This is the ultimate goal. I think that the short sellers are taking advantage of low interest in volume. But, eventually a company like Tilray will produce profits and long run returns for investors.