What happened

Last month, shares of GoPro (GPRO 2.86%) fell 11.1%, according to data provided by S&P Global Market Intelligence. Investors were likely unhappy with the company's fourth-quarter revenue miss, the 26.8% year-over-year revenue drop for full-year 2016, and GoPro's weak guidance for the first quarter of 2017.

Stock image of a stock price chart going down.

Image source: Getty Images.

So what

GoPro's fourth-quarter revenue jumped by 23.8% on a year-over-year basis to $540 million, but that was far below the company's own guidance for the quarter of $600 million to $650 million.

Management said on the earnings call that the "biggest challenge" to its quarterly revenue was the fact that it decided to remove its newly released Karma drone from the market after GoPro found that some of the drones' batteries were disconnecting from the device during flight. 

GoPro also reported a GAAP net income loss of $115.7 million, which came mostly from a $102 million charge for a full valuation allowance on its U.S. deferred tax assets and the company's restructuring charge of about $37 million.

To make matters worse, management said revenues for the first quarter of 2017 are expected in the range of $190 million to $210 million, compared to Wall Street estimates of about $267.6 million. While analyst estimates aren't always a great metric to follow, investors were nonetheless disappointed.

Now what

GoPro's management said that one of its main goals for this year is to "strengthen execution and manage costs." The company's CEO, Nicholas Woodman, says GoPro is already leaner and more focused than before, and that, "We believe that without sacrificing our roadmap the actions we have taken will reduce our operating expenses to below $600 million, down more than $100 million from 2016."

The company expects gross margins in the first quarter to be in the low 30% range and operating expenses to be between $145 million and $155 million.