SNDL (SNDL -1.57%) achieved a mammoth 2,344% growth rate in its most recent quarterly results, largely thanks to acquisitions. Expanding into cannabis stores and liquor retail have led to the cannabis company reporting record sales numbers. Unfortunately, that hasn't led to profitability or even a better stock price -- shares of SNDL are down close to 50% this year. That's worse than the Horizons Marijuana Life Sciences ETF, which has fallen by 42%.

But SNDL isn't done wheeling and dealing, as it just announced yet another acquisition.

SNDL to acquire Valens in an all-stock transaction

On Aug. 22, SNDL announced it was going to acquire cannabis extraction company, Valens, for 138 million Canadian dollars ($106.06 million). SNDL will fund the transaction through shares, keeping its cash intact -- but diluting shareholders in the process.

SNDL says the acquisition will help it offer more diversified products to the market. And with the transaction, it estimates its market share of the Canadian cannabis market will be 4.5%. Over the trailing 12 months, Valens has reported revenue of CA$86.6 million and losses of CA$220.8 million. During that time, it has also burned through CA$72.5 million from its day-to-day operations.

More growth is on the way, but at what cost?

The immediate takeaways from this are that SNDL has again found a way to increase its revenue and diversify its business. It's also a notable move in that it isn't expanding further into retail. In its most recent acquisitions, the company acquired Alcanna (alcohol retailer) and Spiritleaf (cannabis retailer).

For investors, however, this may not necessarily be a net positive. Although SNDL is making the acquisition at a time when pot prices are depressed, an all-stock deal means that it is diluting its own shareholders for the sake of completing the transaction. Its own shares recently underwent a 10-for-1 reverse stock split, and more splits could still be on the way as management obtained authorization from shareholders in a recent meeting to consolidate shares by as much as 25 to 1.

SNDL's management likes to routinely claim that it has one of the best balance sheets in the cannabis industry as it has CA$334.9 million in unrestricted cash (as of Aug. 11) and no debt. But that isn't doing much good to investors who continue to see the business issuing shares for unprofitable companies that may only end up compounding SNDL's problems in the long run. A strong balance sheet should enable a company to fund its own growth and not rely on issuing shares. In SNDL's case, it's simply hoarding the cash while still diluting shareholders, making its claims of having such a strong balance sheet appear misleading and disingenuous.

Why investors should avoid SNDL

The acquisition of Valens doesn't make SNDL any better of a buy than it was when it released its latest earnings numbers. Investors should expect to see more dilution as long as the company doesn't address its cash burn (it has totaled CA$94.6 million over the trailing 12 months) while still pursuing acquisitions. Its business may be more diverse than it was a year ago, but that doesn't mean that SNDL has addressed any issues that plagued it back then -- consistent growth and a lack of profitability. This stock may only become riskier with each successive acquisition that the business takes on. Unless you're willing to lose all or most of your investment, you should avoid SNDL at all costs.