Canada-based cannabis company Tilray is making strong, slow, steady moves into the U.S. cannabis market. In August, Tilray bought the majority of MedMen’s convertible notes, giving Tilray the ability to convert 21% of MedMen’s equity. Before that, Tilray acquired SweetWater Brewing Company and Manitoba Harvest (“the world’s largest hemp food company”).

If full U.S. legalization is approved soon, Tilray can become a U.S./Canada cannabis company, boosting Tilray stock for several years. At the same time, they risk stock dilution.

When Tilray CEO Irwin Simon announced the MedMen deal, he stated that the company’s goal is to reach $4 billion annualized revenue by the end of fiscal 2024 – only two and a half years away.

Tilray’s first-quarter fiscal revenue and earnings for the quarter ending August 31, 2021, rose 43% to $168 million year-over-year. Before accounting for internal organic growth, that puts Tilray on a run rate of $672 million annually. If their quarterly revenue grows 43% annually for the next two and a half years, revenue could increase almost 2.5 times its $672 million, putting them on a path to $1.64 billion in revenue by the end of fiscal 2024.

It seems likely Tilray would continue to grow via acquisition, purchasing larger and larger companies for the coming two years. To reach its target of $4 billion, Tilray would have to acquire a minimum of $2 billion in revenue from existing companies.

Tilray’s stock price is up approximately 15% from its November 17 closing price to $14.22. With an average price target of $13.54, analysts project only mediocre returns throughout 2022 – slightly below 10% upside for the stock.

If Tilray can make over $2 billion in revenue through acquisitions over the next two years, there’s room for the stock to rise. But if Tilray uses equity shares to pay for the investments, it would lead to substantial stock dilution – over a third of its current value.

Analysts encourage caution before purchasing Tilray stock.