Fitbit (NYSE:FIT) served up horrendous quarterly results after Wednesday's market close. Revenue plummeted 19% since the prior year's holiday quarter with a brutal 28% slide in the U.S. market. Gross margin was more more than shaved in half.

The one-time market darling posted its first quarterly loss as a public company, and it's only the beginning. Fitbit sees another quarterly loss for the current quarter and an even larger deficit for all of 2017. 

Fitbit stock didn't take a beating on the news. In fact, it opened slightly higher on Thursday morning. Let's go over why the sky may be falling for Fitbit, but Mr. Market is deciding to look the other way.

Fitbit spokeswoman Julianne Hough jumping rope wearing a Fitbit device.

Image source: Fitbit.

1. We already knew that the quarter was a disaster

This week's rough report wasn't a surprise. Fitbit pre-announced the horrendous financials earlier this month, and the stock took a 15% hit that week. It warned about the red ink and that sales slipped 18% to 20% for the quarter. It wound up landing smack dab in the middle of that pre-announcement. 

Fitbit also initiated its dismal 2017 guidance at that time, and it's sticking to the $1.5 billion to $1.7 billion in revenue for the year. That's a fad-rattling plunge of 22% to 31% off of 2016's production, but -- again -- we knew that already. If anything it's actually comforting that Fitbit didn't see anything in the past three weeks that would make it lower that outlook. 

2. There were traces of optimism in the carnage

Raymond James analyst Tavis McCourt feels that Fitbit's holding up better than its numbers on the surface indicate. The actual sell-through in dollar terms was flat for the quarter, a lot better than the 19% top-line plunge. Retailers had a lot of inventory to go through when the quarter began, as Fitbit was filling up channel inventory earlier in the year on misplaced optimism. 

McCourt is realistic. He knows that things will get worse in the near-term and that comparisons will get harder now as Fitbit stacks up against the initially successful Alta tracker and Blaze smartwatch launches in early 2016. However, McCourt is still keeping his bullish Outperform rating on the stock. 

Guidance for 2017 is hard to take, but all it takes is another hit product to get things back on track. Fitbit mentioned during its call that it's eyeing new form factors beyond the wrist huggers that it's best known for. Fitbit dominates the market for the innovators and early adopters in the tracker market, but now it needs to shift gears to reach the 40 million to 80 million potential customers that it sees in the mainstream segment of the marketplace. Fitbit will get through by streamlining its portfolio to make it easier for customers to pick the best device. Following the release of the Blaze smartwatch and acquiring Pebble for a song, Fitbit will also be making a bigger push into more full-featured sophisticated devices. 

The comparisons will be rough, at least through the first half of this year. It's not crazy to suggest that things may bottom out and a turnaround can start to form by the end of 2017. 

3. The stock was already cheap 

Fitbit stock was trading 89% below its all-time high set two summers ago at Wednesday's close. Fitbit as a disappointment is a known narrative, and no one is buying in under the impression that they're buying a market darling. There's a reason why the stock is trading in the single digits. 

However, Fitbit is still a company that sold 6.5 million wearable technology devices during this seemingly horrendous quarter. There's only one company moving more wearable tech, and that also happens to be the world's most valuable consumer tech company. There are now 23.2 million active Fitbit users, 37% ahead of where it was a year earlier -- and enough to make it the largest social fitness network. 

Fitbit begins 2017 with $706 million in cash and marketable securities on its balance sheet, and that's more than half of its market cap. Fitbit is in a funk, but it's not going away anytime soon. It has the means and the time to get it right, though there's no denying that shareholder patience will be tested in the near-term.