What happened

Shares of Aurora Cannabis (NYSE:ACB) sank on Wednesday after analysts raised concerns that the popular marijuana stock's price gains may have come too far, too fast.

As of 3 p.m. EDT, Aurora's stock was down more than 12%. 

So what 

Aurora's shares surged as much as 180% following the cannabis producer's better-than-expected third-quarter sales results on May 14. However, soon thereafter, multiple analysts began to question whether such a strong performance was warranted.

On Wednesday, Raymond James analysts Rahul Sarugaser and Michael Freeman noted that Aurora's recent gains were far larger than those of fellow cannabis producers OrganiGram Holdings (NASDAQ:OGI) and Village Farms International (NASDAQ:VFF), even though these competitors have much better profitability metrics. The analysts said that Aurora's stock gains were equivalent in value to "twice that of OGI's entire market cap (about $250 million) -- or thrice that of Village Farms' market cap ($178 million) --- after reporting a net loss equivalent to about 50% of OGI's market cap, or 75% of VFF's."

"Let that sink in," they said. 

A person is pointing to a digital stock chart that rises sharply and then falls.

Shares of Aurora Cannabis fell sharply on Wednesday, following warnings from analysts. Image source: Getty Images.

Sarugaser and Freeman's comments follow worrisome remarks by MKM analyst Bill Kirk on Tuesday. Kirk cautioned that despite Aurora's progress in the third quarter, there were no assurances that it would hit its earnings targets. Worse still, Kirk cautioned that Aurora could suffer losses on a potential forthcoming oversupply of cannabis. "Despite the efforts to streamline production, Aurora is still growing far more cannabis than it is able to sell," Kirk said. "We don't see demand growth accelerating enough to consume this inventory and expect Aurora to ultimately write it down." 

Now what

Stocks that rise rapidly can fall just as quickly. We've seen this type of extreme volatility in Aurora's stock before, and we may continue to see it in the days and weeks ahead. Ultimately, however, the stock's long-term performance will be determined by Aurora's ability to reach sustained profitability.

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.