1 Big Question to Ask Yourself Before Buying Aurora Cannabis

Let's call it like it is. Aurora Cannabis (NYSE: ACB) is an underperforming stock, with its shares down more than 90% over the last 12 months. That's not only worse than the S&P 500, up over 12% during the same period, but it's not even close to the Horizons Marijuana Life Sciences Index ETF, which includes many of Aurora's peers and has fallen by 46%.

The Canadian cannabis company is an intriguing investment because on one side of the coin, its recovery seems inevitable given its low price. On the flip side, the company has continually disappointed investors through share dilution and consistent writedowns. If these trends continue, its shares could crash to the ground. There's certainly significant risk involved with investing in Aurora, and one important question investors need to ask themselves before adding the pot stock to their portfolios is the following:

There's no doubt that if Aurora turns things around in the next 12 months, grows its sales, and achieves a positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), then the stock could reverse its current downward trajectory. (Aurora's current target for reaching a positive EBITDA is the second quarter of fiscal 2021.) Considering how much the stock has already fallen, it's not unrealistic to hope it doubles or triples in value during a turnaround.

Source Fool.com