What happened

Shares of Aurora Cannabis (ACB 8.70%) tumbled 22% for the month of July, according to data provided by S&P Global Market Intelligence, even as the Horizons Marijuana Life Sciences Index ETF fell 11% and the S&P 500 managed to cobble together a 2.2% gain.

Aurora, one of the Robinhood investing app's most-held stocks, has enjoyed few bright moments in 2021. And with the prospects of marijuana legalization in the U.S. not looking especially promising on the federal level at the moment, the pot stock had very few days to be happy about last month.

Man inspecting marijuana plant

Image source: Getty Images.

So what

Aurora serves both the medical and consumer marijuana markets in Canada. And while the industry has suffered from regulatory miscues that have hindered cannabis companies from achieving their full potential, Aurora has exacerbated its situation by heavily diluting shareholders with excessive share offerings. Its share count has risen more than tenfold over the past few years. 

In May, it announced a new plan to sell up to $300 million worth of stock in an at-the-market offering.

Its operations are not profitable, either, and it has failed to make any real headway there. Sales tumbled in its fiscal third quarter by 21% and its consumer segment plunged by half, though it blamed the pandemic and Canadian lockdowns of retail stores that have largely been more rigorous than here in the U.S.

Now what

Unlike many of its peers, Aurora Cannabis does not have a deep-pocketed partner on which to lean. No multinational corporation has stepped forward to invest billions in its grow operations, as occurred with Canopy Growth, Cronos Group, and Tilray.

So if marijuana were legalized federally, while it might allow Aurora to expand into new markets in the U.S., it would also undoubtedly create a crush of new rivals that it can ill afford to compete against at the moment. The company could use new opportunities for growth, but they'd likely undermine its financial position more if they did open up.

Investors will need to see whether Aurora Cannabis can regain its footing as Canada's economy finally reopens. It's likely not going to happen this next quarter, but the marijuana stock might be able to find its footing over the coming quarters.