Fitbit (NYSE:FIT) is losing some of this late summer's bullish momentum, and it will take a strong quarterly report on Wednesday afternoon to get back on Mr. Market's good side. The wearable fitness leader was in the doghouse until bouncing back with back-to-back months of double-digit percentage gains in August and September. We're now eyeing a double-digit decline in October, a problematic trend heading into this week's third-quarter results. 

Analysts aren't holding out for much. They see revenue sliding 22% to $391.8 million. Wall Street pros are also expecting a loss of $0.04 a share, reversing a healthy profit a year earlier. Fitbit has beaten analyst profit targets by at least $0.04 a share in its two previous quarters, but even if it's able to merely break even, it's likely still to produce a sharp drop on the top line. 

A jogger wearing a Fitbit bracelet climbing up a flight of stairs.

Image source: Fitbit.

Wrist aversion

Fitbit sales peaked last year, and it has gone on to post three consecutive quarters of double-digit percentage declines in revenue. Wednesday's results should stretch that streak to four quarters, though naturally the year-over-year comparisons will get easier starting with the current quarter. 

A lot will be riding on Fitbit's guidance. Fitbit Ionic -- its first true smartwatch -- didn't hit the market until after the third quarter came to a close. Ionic will have an uphill battle, as only one smartwatch has truly been a game changer. However, the potential of Fitbit to score here given Ionic's $299 price tag and Fitbit's new headphones accessory could really drive Fitbit's average selling prices sharply higher. 

Fitbit was modeling a 22% to 29% top-line drop for all of 2017 three months ago, and naturally it will narrow and possibly adjust that range on Wednesday. The good news for investors is that landing at the midpoint of that range suggests flattish top-line results for the fourth quarter after the sharp slide during the first half of the year. 

The market won't toast to flat revenue growth in and of itself. We will be pitting Fitbit's performance against a 19% slump in the prior year's fourth quarter. Here is where guidance is crucial. Numbers that suggest actual top-line growth will be big. Suggesting that the streak of deficits -- currently at three quarters and counting -- is coming to an end would be even bigger.   

Investors have fallen for Fitbit's head fakes before. A push to get fitness trackers subsidized by employees as part of corporate wellness programs has failed to overcome sluggish retail trends, and new products haven't generated the kind of pop in sales that we've seen in the past. Good news with a tangible impact on its top and bottom lines is what Fitbit investors need at this point, and we'll see what the company delivers soon.

Rick Munarriz owns shares of Fitbit. The Motley Fool owns shares of and recommends Fitbit. The Motley Fool has a disclosure policy.