The one-time leading fitness tracker maker has gotten a bit flabby of late. Fitbit (NYSE:FIT) has lost market share to rivals including Apple (NASDAQ:AAPL) and Xiaomi as the wearables market has bifurcated between premium smartwatches and low-end fitness bands. Fitbit has largely been caught in the middle.

The device maker plans to report fourth-quarter earnings on Feb. 26 after the market closes. The fourth quarter is an important one for Fitbit because it derives 35% of its revenue in the period and it will bring to a close what the company itself has described as a "rebuilding year."

With the wearables market expected to double in the next four years to 222.3 million units, and Fitbit issuing a slew of new products to meet the challenge and try to grow revenue and profit, here are four things investors should be looking for on Monday.

Fitbit Ionic smartwatch in three colors.

Image source: Fitbit.

1. Ionic sales growth

Because the Ionic is Fitbit's answer to the smartwatch threat, investors need to know whether people are actually buying the device. Smartwatch shipments are expected to jump from 31.6 million in 2017 to 71.5 million in 2021, according to IDC, so it's a growing category and preliminary indications for the Ionic haven't been good. Some analysts report weak sales with devices like the Blaze surpassing it.

That's a problem if the pattern holds true, and it could be because Fitbit failed to get functionality and connectivity on the same page. The Ionic has reportedly been plagued with issues with phone integration, text messaging, and notifications, all the key components of being a viable smartwatch.

While Apple may be shoehorning fitness into its Apple Watch, swapping out marketing of its computer-like capabilities for its health monitoring advantages, its functionality as a smartwatch is largely flawless and that's a problem for Fitbit.

2. Revenue and profit growth

Can Fitbit get revenue growing again? Over the past year, the wearables maker saw sales tumble by double-digit rates, with revenue last quarter down 22% year over year, and plunging 35% year to date. It also turned profits into everwidening losses. It went from generating $43.5 million in net income for the first nine months of 2016 to experiencing losses of $231.7 million over the same time frame in 2017.

The fourth quarter may at least provide an indication it can get back on track, even if it isn't growing revenue or producing profit just yet. Most times, direction is more important than location, and Fitbit needs to prove it is on the right path. With more competitors entering the market regularly, and existing players like Apple and Garmin increasing the usefulness of their own devices, it's more important than ever that Fitbit can show growth.

Joggers wearing Fitbit Blaze trackers.

Image source: Fitbit.

3. Average selling prices

While the Ionic is priced at $300, placing it competitively under the Apple Watch, the wearables market is increasingly being commoditized and that's actually driving prices down. Way down. Consumers can pick up a Xioami Mi for around $15, which explains why it has been launched into the forefront of the wearables market, but that places intense pressure on mid-tier Fitbit.

If it can keep its own average selling prices (ASPs) moving higher, that will bode well for Fitbit's profit margins. Last quarter ASP rose 12% to $104.72 per device, and that was up 4% sequentially, inline with the prior quarter's results.

4. Plans for Twine Health platform

The acquisition of Twine Health, a cloud-based health platform, isn't going to have an impact on fourth-quarter earnings, but it is important nonetheless because it will provide insight into the direction Fitbit could be heading. It will also serve to show whether Fitbit can make money selling things other than wearables.

While the Twine purchase is being billed with the lofty goal of driving "better health outcomes and ultimately, lower healthcare costs," the real benefit to Fitbit is in the potential to become a useful tool for both users and medical professionals. Fitbit's various platforms dealing with health could become a vital component for future growth.

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