If you think the past seven weeks have been ugly for investors, narrow your focus a bit and take a gander at cannabis stocks.

Through the first quarter of last year, more than dozen marijuana stocks had gained at least 70% over a three-month period, and sales projections for legal cannabis kept creeping higher. Then, the bubble burst, with most pot stocks losing anywhere from 50% to 95% of their value over the past 12-plus months.

Perhaps the poster child of the boom-bust nature of cannabis investing is Aurora Cannabis (ACB -4.35%). Aurora, the most popular stock by a long-shot on millennial-focused online investing app Robinhood, has lost approximately 92% of its value since mid-March 2019. Now valued at a mere $0.80 per share (albeit still equating to a $960 million market cap), the question has to be raised: Could Aurora Cannabis go to $0?

An up-close view of a flowering cannabis plant growing in an indoor farm.

Image source: Getty Images.

Aurora Cannabis was once pegged for greatness

At one time, Aurora's outlook was promising. The company had 15 prospective cultivation sites around the world with a peak annual run-rate that was likely nearing 700,000 kilos. Inclusive of Canada, the company also had a production, research, export, or collaborative presence in 25 countries. Both the peak production potential and overseas reach were far and away tops in the marijuana industry. Having two dozen international markets at its disposal was designed to ensure that domestic oversupply never became a problem.

Aurora Cannabis also wound up hiring billionaire activist investor Nelson Peltz as a strategic advisor in March 2019. Peltz has a long history of investing in food and beverage companies, which made him the perfect individual to potentially bridge a partnership or equity investment with a brand-name consumer-packaged goods company. This hiring came just months after Constellation Brands sunk $4 billion into Canopy Growth as an equity investment, and Altria Group purchased a 45% stake in Cronos Group for $1.8 billion.

Then there was Aurora's management commentary, with longtime (and now-former) CEO Terry Booth predicting at least 625,000 kilos of run-rate output by the end of the company's fiscal 2020 year (June 30, 2020), and a real chance at positive adjusted EBIDTA by the end of calendar year 2019.

It all looked great on paper, but not one lick of this vision is still in play today.

A one hundred dollar bill on fire atop a lit stove burner.

Image source: Getty Images.

Absolutely nothing has gone right for the most popular pot stock

In November, Aurora Cannabis announced that it would be halting construction on two of its largest production farms (Aurora Sun in Alberta and Aurora Nordic 2 in Denmark) in order to conserve capital. Not long thereafter, the company placed the 1-million-square-foot Exeter greenhouse on the sale block for about $17 million Canadian. Exeter is a vegetable-growing greenhouse acquired in the MedReleaf purchase that Aurora has yet to retrofit for cannabis production. These construction halts, and the presumed sale of Exeter, essentially takes more than 400,000 kilos of peak annual output off the table.

As for Peltz, his signing as a strategic advisor has resulted in absolutely nothing. With the exception of landing a role as a supplier for PAX Labs Era vaping device, Aurora Cannabis hasn't attracted a brand-name partner, nor has it received a coveted equity investment.

And as for those visions of positive adjusted EBITDA, they've been thrown completely out the window. In fact, the real question, after perusing Aurora's balance sheet, is whether it has the ability to even survive?

On one hand, Aurora's overzealous acquisition strategy has left it with a mountain of goodwill – i.e., it grossly overpaid for the companies it acquired. Even after writing down CA$762 million in goodwill in the most recent quarter, Aurora's remaining CA$2.41 billion in goodwill dwarfs its market cap. In my view, additional writedowns are almost certainly coming.

A person holding a magnifying glass above a company's balance sheet.

Image source: Getty Images.

On the other hand, the company's available cash looks wholly insufficient to cover its upcoming expenses. In mid-February, when Aurora filed its fiscal second quarter management discussion and analysis, the company forecast expected liabilities over the next 12 months of CA$373.6 million. This compares to CA$156.3 million in cash and cash equivalents and CA$26.1 million in marketable securities. The company is really down to its final option of late, which has been to issue stock like Monopoly money to raise capital. That's why the company's outstanding share count has ballooned to 1.17 billion from 16 million in about 5.5 years.

Making matters worse, selling assets may not net Aurora Cannabis the capital it needs to cover its expenses. Although it lists CA$1 billion in property, plant, and equipment on its balance sheet, the retail market for cultivation and processing assets is grim throughout Canada given the regulatory supply bottlenecks plaguing the country. Translation: Aurora Cannabis is really short of ways to raise money, aside from continuing to issue its own common stock.

But does this lack of cash mean it's going to $0? While I remain decisively bearish on Aurora Cannabis and believe it should be avoided by investors at all costs, the company's ability to halt cultivation activity, shed more jobs, and continue to issue stock at the detriment of its shareholders, will likely keep it from going to $0. However, without a stroke of good fortune in the near future, delisting from the New York Stock Exchange and further downside will await.