Tilray: Big Opportunities Ahead In Germany And Alcohol Segment

Summary:

  • Recently introduced German cannabis laws will make it easier to obtain medical and therapeutic cannabis products.
  • Tilray being the market leader in Germany bodes well for its future revenues, considering its distribution segment represents 41% of its total revenues.
  • Tilray’s alcohol segment is growing as a percentage of revenue, which is a positive sign for future profitability thanks to its high margins.
  • My price target for Tilray is $4.67 by the end of 2025, representing 175% upside from the current valuation.

Detail of cold glass of beer with cannabis leaf

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On February 23rd, German lawmakers passed a cannabis legalization bill allowing the recreational use of cannabis. However, the law included strict rules that will make it difficult to buy the drug. This has caused public cannabis equities with operations in Germany, including

Year

Distribution Revenue

German Cannabis Market Size

Market Share

2022

$259,747,000

$796,800,000

33%

2023

$258,770,000

$1,037,000,000

25%

2024

$311,825,000

$1,247,300,000

25%

2025

$363,100,000

$1,452,400,000

25%

2026

$414,325,000

$1,657,300,000

25%

2027

$466,050,000

$1,864,200,000

25%

Year

Total Revenue

Alcohol Revenue

% of Total Revenue

2022

$628,372,000

$71,492,000

11.38%

2023

$627,124,000

$95,093,000

15.16%

2024

$370,620,000

$70,567,000

19.04%

Quarter

Alcohol Revenue

Alcohol Gross Margin

Q1 22

$15,461,000

56.90%

Q2 22

$14,544,000

59.29%

Q3 22

$19,597,000

58.71%

Q4 22

$21,890,000

58.23%

Total 2022

$71,492,000

58.29%

Q1 2023

$20,654,000

47.47%

Q2 2023

$21,395,000

46.62%

Q3 2023

$20,640,000

48.34%

Q4 2023

$32,404,000

64.95%

Total 2023

$95,093,000

53.43%

Q1 2024

$24,162,000

53.37%

Q2 2024

$46,405,000

34.25%

Year

Projected Revenues

P/S

Price Target

Upside

2024

$804,600,000

1.57

$4.26

151%

2025

$884,910,000

1.43

$4.67

175%

Quarter

Cannabis Revenue

Cannabis Gross Margin

Q1 22

$70,449,000

42.95%

Q2 22

$58,775,000

43.41%

Q3 22

$69,178,000

46.45%

Q4 22

$39,120,000

36.50%

Total 2022

$237,522,000

43.02%

Q1 2023

$58,570,000

50.72%

Q2 2023

$49,898,000

37.20%

Q3 2023

$47,549,000

46.66%

Q4 2023

$64,413,000

65.54%

Total 2023

$220,430,000

51.12%

Q1 2024

$70,333,000

28.17%

Q2 2024

$67,114,000

30.76%

Quarter

OS

Q1 22

460,658,653

Q2 22

466,522,611

Q3 22

497,708,464

Q4 22

536,390,766

Q1 23

611,402,319

Q2 23

615,494,626

Q3 23

618,007,938

Q4 23

703,257,224

Q1 24

730,289,573

Q2 24

742,725,148


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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