What happened

It's been a rough week for investors in marijuana stocks, and for investors in Aurora Cannabis (NASDAQ:ACB) in particular. Aurora stock hasn't seen an up day since Monday, when the election results were mostly finalized.

Because Vice President-elect Kamala Harris had campaigned on a plan to decriminalize marijuana, and expunge the records of those with pot-related convictions, it was assumed Monday that the Democrats' victory would be good news for marijuana stocks such as Aurora.

But following several reports of bad news for the company, Aurora Cannabis stock is trading down for the third day in a row today, falling 4.5% through 11:50 a.m. EST.

Glowing red stock chart arrow trending down

Image source: Getty Images.

So what

Aurora's earnings news showed sales down 10% year over year, and an $81 million net loss. Then Aurora said that its free cash flow was still going negative, with $93 million in cash burned during the first fiscal quarter of 2021.

And then the company added insult to financial injury, announcing plans to sell 20 million new shares in an effort to raise $150 million to replace its lost cash.

Now what

Will the sell-off ever end? Investors can hope. If the president-elect even hints at a desire to move forward with federal legalization of marijuana, I expect Aurora shares will jump on the change in sentiment. For the stock to make sustained gains, however, the company must find a way to earn better profits from its product, and start generating cash from its business.

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.