Six months ago, cannabis kingpin Aurora Cannabis (NYSE:ACB) could not be stopped. The company's share price more than doubled from its December lows to hit a closing high that was just pennies from $10 a share, placing the Aurora's valuation at nearly $10 billion, and putting it squarely on the heels of Canopy Growth, the largest marijuana stock in the world by market cap.

Everything was seemingly going Aurora's way. The company was (and still is) primed to lead Canada in peak annual production, and it had just announced the hiring of billionaire activist investor Nelson Peltz as a strategic advisor. It's no secret that a number of Aurora's larger peers have landed equity investments from brand-name businesses, or worked out substantive partnerships with global companies. The hiring of Peltz, who has keen knowledge of the food and beverage industry as an activist investor, was viewed as the bridge that'll allow Aurora Cannabis to move into ancillary global industries.

An up-close view of a flowering cannabis plant in a large indoor grow farm.

Image source: Getty Images.

However, looks can be deceiving. Through Wednesday, Sept. 18, Aurora's share price had lost nearly 50% from its $9.96 closing high on March 19, and was off closer to 60% when compared to the company's 52-week intraday high.

At just $5.27 per share (in the U.S.), Aurora might look like an incredible bargain. Yet, there's the very real possibility its share price could continue to fall, pushing its valuation down to perhaps $4 billion, or less.

Here are 10 valid reasons Aurora Cannabis might see a sub-$4 share price in the not-so-distant future.

1. Supply issues beyond its control

To begin with, Aurora's fiscal fourth-quarter report points out that while a number of internal supply chain kinks have been worked out, there are supply issues beyond its control at this point that need to work themselves out. These supply issues concern a backlog of cultivation and sales applications for review by Health Canada, as well as the snail's pace by which some provinces are approving dispensary store licenses. These problems are liable to take many quarters to resolve.

2. Vape health concerns

Another broad concern that impacts the entire industry is the vaping health scare in the United States. In recent weeks, hundreds of cases of mysterious lung illnesses associated with vaping have been reported, along with seven vape-associated deaths. While it's unclear what's causing this rash of lung illnesses, some subsets of affected patients have revealed cannabis use through electronic cigarette devices. With Aurora being one of four chosen partners of vape device giant PAX Labs, these worries could directly impact the launch of vape products in Canada by mid-December.

A small pile of one hundred dollar bills on fire, with more one hundred dollar bills as wallpaper in the background.

Image source: Getty Images.

3. Operating underperformance

Aurora Cannabis also isn't inspiring investors with its quarterly operating results. Even though production is on the rise, Aurora's fiscal fourth quarter sales wound up missing its own guidance from five weeks prior. Further, promises of positive adjusted EBITDA that were set early in calendar 2019 were dashed when the company continued to lose money on an adjusted EBITDA basis. It's looking more and more likely that Aurora won't turn the corner to full-year profitability in fiscal 2020.

4. Minuscule international sales

No marijuana stock has a more impressive overseas presence than Aurora Cannabis. Inclusive of cultivation, export agreements, joint ventures, and research, Aurora has operations in 25 countries, including Canada. The only problem is that it can't really take advantage of these international markets until domestic demand is satisfied -- and that's going to take some time, as described by the mentioned supply issues. In the meantime, international sales growth remains subpar.

5. No major partner (as of yet)

Investors were clearly excited by the hiring of Nelson Peltz in March, but have to be disappointed with the lack of a major equity investor or distribution partner with just three months to go before derivative products launch in Canada. Yes, the deal to become a supplier for PAX Labs' Era vape device was a solid win, but for a company with the production potential that Aurora has, it's a disappointment to still be going it alone.

A black silhouette of the United States that's partially filled in by baggies of cannabis, rolled joints, and a scale.

Image source: Getty Images.

6. Undefined U.S. strategy

It's no secret that Aurora Cannabis has plans to enter the U.S. market, which is projected to be the most lucrative marijuana market in the world by aggregate annual sales. Yet, Aurora has been slow to develop and implement a strategy that allows it to benefit from growth in the hemp and cannabidiol (CBD) industry in the meantime. It's fallen behind a number of its peers in legally pushing into the United States' CBD market.

7. Mammoth goodwill

Aurora is a big fan of growing inorganically. Since August 2016, the company has made more than a dozen acquisitions, ultimately increasing its production capacity, expanding its brand offerings, and improving its supply chain infrastructure. But there's a price to be paid for this expansion, and it's known as goodwill – i.e., the premium paid above and beyond tangible assets. Aurora has racked up 3.17 billion Canadian dollars in goodwill, representing 58% of its total assets. In other words, it's grown increasingly likely that the company will, at some point in the future, write down a portion of its goodwill and admit to overpaying for some, or most, of its acquisitions.

8. Industrywide trust issues

Investors can also blame trust issues for Aurora's current, and perhaps continued, underperformance. We've witnessed growers blatantly ignore the Cannabis Act and cultivate illicit marijuana, and also had our fair share of conflicts of interest at the executive level. Although Aurora isn't guilty of anything of that nature, it did just miss its own revenue guidance issued five weeks earlier. Investors simply don't trust cannabis stocks, and it's begun to show in their share price.

An investor holding a magnifying glass above a company's balance sheet.

Image source: Getty Images.

9. Long-term dilution

There's another price to pay for the company's aggressive acquisition strategy beyond just goodwill and the possibility of a writedown. With minimal access to basic banking services, Aurora Cannabis has frequently acquired other businesses by using its common stock as capital. In the past five years, the company's outstanding share count has risen by 1 billion shares, which is a tough pill to swallow for long-term shareholders who've been continually diluted with each new purchase.

10. Investor pessimism is building

Finally, take note that pessimism is building on Wall Street and among retail investors. As of July 14, 87.2 million shares of Aurora's stock were held by short-sellers (i.e., investors who want the stock to decline). But by Aug. 14, short-sellers had control of 116.5 million outstanding shares, or more than 11% of the company's total shares. Wall Street and investors are clearly sounding the alarm on Aurora Cannabis, and it would behoove marijuana stock investors to listen.