HEXO Corp. (NYSE:HEXO) has taken investors on a roller-coaster ride in 2019. After soaring more than 140% by late April, the stock steadily sank in the subsequent weeks and months. HEXO is currently down 45% from its highs set earlier this year.

But smart investors don't obsess over short-term volatility. Instead, they focus on the long-term prospects for the stocks that they buy. This raises a good question, though: What exactly are the long-term prospects for HEXO? Where will the company be in five years and beyond?

There are no easy answers to these questions since we can't accurately predict the future. However, here's my take on what the future might hold for HEXO.

A hand holding a piece of paper with a cannabis leaf cut out and pedestrians in a city in the background.

Image source: Getty Images.

Most likely future

I think that HEXO should rake in at least $350 million annually by 2024 and perhaps quite a bit more. How did I arrive at this figure? I started with a middle-of-the-road estimate that the annual Canadian adult-use recreational marijuana market will be around $5 billion. I then estimated that HEXO could capture around 7% of this market.

Let me explain why I think that 7% market share is realistic. HEXO currently claims a market share of around 30% in Quebec, with which it has a multiyear supply agreement. My view is that HEXO can hold onto its market share. Quebec's population represents around 21% of the total Canadian population. If Quebec snags a similar percentage of the recreational pot market and HEXO has a 30% market share in the province, that would give the company around 6.3% of the total Canadian market.

HEXO also has a presence in other Canadian provinces, although it won't capture nearly as big of a market share in them. As a result, I bumped up my overall market share estimate to 7%. Could HEXO's market share be even higher? Absolutely. I think the 7% figure is a floor, not a ceiling.

Actually, I suspect that HEXO could make a lot more money outside of Canada. The company's partnership with Molson Coors Brewing seems likely to expand beyond Canada into other countries. HEXO CEO Sebastien St-Louis said in June that he anticipates his company will team up with other big players from outside the cannabis industry. One or more of these deals could enable HEXO to expand its operations in the potentially lucrative U.S. hemp market.

My hunch is that HEXO will indeed secure another major partnership or two. I think the company will be able to boost its total revenue considerably in international markets, including the U.S. It's a total guessing game as to how much additional revenue HEXO will be able to make, but $150 million or more wouldn't be surprising.

If we use that number, HEXO's total revenue five years from now could be in the ballpark of $500 million. That should give the company a market cap of at least $2.5 billion, which would translate to the stock gaining close to 350% or more over the next few years.

What could go wrong

Any prediction about the future involves lots of assumptions. And those assumptions could prove to be totally off base.

For example, Canada's adult-use recreational marijuana market might not grow nearly as much as expected. We're already seeing issues with the launching of retail stores that have inhibited growth in this market. While I expect these wrinkles will be ironed out, that $5 billion market size figure could be overly optimistic.

It's also possible that HEXO won't retain its commanding market share in Quebec. The company's supply agreement with the province is in place for five years, but the clock started in 2018. Also, Quebec has the right to terminate the agreement under certain circumstances. My view is that HEXO will keep its market share in the province at close to the 30% level, but there's a small chance that it won't be able to do so.

St-Louis fully expects that there will be a big shakeout in Canadian cannabis producers within the next couple of years as supply exceeds demand. I agree that this scenario could play out, but I also think it's possible that the timing could be delayed. It's possible that five years from now HEXO is still in the midst of the chaos with a much lower market cap than it would otherwise have.

Other possibilities

There are two other possibilities that could have a huge impact on where HEXO will be in five years. One is that the U.S. could change its federal laws related to marijuana. If HEXO could enter the U.S. recreational and medical cannabis markets in a significant way, the company's prospects could be much better than I envision right now.

The other potential development is that HEXO could be acquired. My take is that the company will still be an independent entity in 2024. However, I wouldn't rule out the possibility that Molson Coors or another major company could buy HEXO if growth for the global cannabis market exceeds expectations.

Regardless of which future scenario becomes reality for HEXO, I think there's one prediction that I can pretty safely make: The roller-coaster ride will continue.