What happened

Shares of Aurora Cannabis (NASDAQ:ACB) were sinking by 15.9% as of 3:29 p.m. EST on Monday. This marked the third consecutive day of double-digit declines for the Canadian marijuana stock. The underlying reason remains the same: Aurora's dismal fiscal 2020 first-quarter results, announced last Thursday.

So what

With today's big drop combined with last week's declines, Aurora has now lost more than one-third of its value in only one week. There's certainly a strong case to be made for the overwhelming negativity. Aurora's revenue plunged in Q1, in large part due to continued issues with the lack of retail cannabis stores in Canada. The company also is still losing a lot of money, which makes conserving cash a major priority.

Shadow of Canadian maple leaf on top of a pile of cannabis leaves

Image source: Getty Images.

However, at some point, investors will likely begin wondering if the sell-off has gone too far. While there are reasons to be down on Aurora's near-term prospects, there are also some reasons to be more optimistic about its longer-term opportunities.

Probably the two most important factors that could help Aurora are the anticipated opening of more retail cannabis stores in Ontario and the launch of the Cannabis 2.0 cannabis derivative products market. Aurora's adult-use recreational marijuana brands are popular, so the company should benefit tremendously from both of these growth drivers. 

Aurora is also taking steps to curtail spending. The company announced last week that it's putting plans to complete construction at two facilities on hold, decisions that should save 190 million Canadian dollars.

Now what

Marijuana stocks will almost certainly continue to be highly volatile. There's arguably more bad news and uncertainty than at any time since the Canadian recreational marijuana market opened in 2018. However, there's only so far lower that Aurora can go before the stock begins to look like a bargain buy to some investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.