Aurora Cannabis (NASDAQ:ACB) remains one of the most widely bought marijuana stocks on the market. It's even the most popular pot stock on the Robinhood trading platform.

However, Aurora has been an absolute failure for investors. If you'd bought $10,000 of Aurora's shares three years ago, you'd now have only around $1,430. If you'd invested the same amount at the beginning of this year, you'd have less than $2,900.

This popular pot stock has been like poison for investors' portfolios, and this one chart explains why. 

Aurora's dilution solution

The chart below illustrates the inverse relationship between Aurora's increasing number of diluted shares and its decreasing share price. This relationship makes sense when you think about it. A higher number of shares makes existing shares less valuable. 

ACB Chart

ACB data by YCharts

How would Aurora's shares have performed without all of its dilution-causing stock offerings? There's no way to know for sure since multiple factors impact a stock's performance. However, here's another chart that could help us get a feel for what might have been:

ACB Chart

ACB data by YCharts

The only difference between the first and second charts is that the latter includes Aurora's market cap percentage change over the last three years. The company's market cap declined during the period but not nearly by as much as its share price fell. Aurora's stock offerings caused its share price to plunge because of dilution, but didn't impact its market cap.

It's kind of like having a pizza that you initially cut into four big slices. You then keep cutting the pizza into more slices -- eight, 16, etc. With every cut, each slice of pizza becomes smaller, like Aurora's share price when new shares were issued. However, like the size of the pizza itself, Aurora's market cap remained unchanged.

Only a symptom

Aurora's dilution, though, is really only a symptom of the company's chief problem: its continuing losses. If the Canadian cannabis producer were churning out hefty profits, Aurora wouldn't need to issue new shares to raise additional cash.

But Aurora isn't anywhere close to delivering strong profits. In its latest quarterly update, the company posted a net loss from continuing operations of 107.2 million Canadian dollars.

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

Image source: Getty Images.

The company did, however, state that it's on track to generate positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the current quarter. That would certainly be an important step in achieving consistent profitability.

Unfortunately, just one week after reporting its fiscal 2021 first-quarter results, Aurora announced yet another public stock offering. As its number of outstanding shares went up again, its share price went down.

The missing puzzle piece for Aurora

Aurora's management team has done a good job of cutting costs. Because of their efforts, the company seems to have a pretty good shot at meeting the goal of positive adjusted EBITDA when Aurora provides its next quarterly update.

However, there's still a missing puzzle piece that Aurora needs to truly turn things around -- strong revenue growth. The company delivered minimal revenue growth in its latest quarter and even lost ground in the important Canadian recreational marijuana market.

Investors have long hoped that potential marijuana legalization at the federal level in the U.S. could give Aurora a huge new growth opportunity. Any major changes to U.S. marijuana laws appear to be unlikely, though, assuming the GOP retains control of the U.S. Senate. 

Aurora can only cut costs so far before the reductions hurt the company more than they help it. The company absolutely needs to return to growth in the Canadian recreational market while simultaneously building its international medical cannabis sales. Until it can, Aurora will probably have to continue resorting to the dilution solution -- and that's not good at all for 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.