GoPro's HERO4 Black and Silver models have comprised more than half of the company's total revenue and unit sales since their launch in 2014. Image source: GoPro,

GoPro (GPRO -3.19%) may have decided to the bite the bullet by reducing its fourth-quarter 2015 guidance last month, but that doesn't mean investors shouldn't be closely watching its official quarterly release later this week. 

What investors already know
For perspective, almost three weeks ago, GoPro shares tumbled after the action camera specialist told investors to expect fourth-quarter revenue to decline 31.4% year over year to $435 million. That was significantly below the company's already-disappointing guidance provided three months ago, which called for revenue in the range of $500 million to $550 million, or a 17% drop at the midpoint. Analysts' consensus estimates had called for a 19% decline.

To blame, according to GoPro management, was a combination of slower-than-expected sell-through at retailers in the first half of the quarter, leading to lower sales of its HERO lines of capture devices, as well as around $21 million in price protection related to the latest price reduction for its HERO4 Session device.

In addition, GoPro anticipates adjusted gross margin to be between 34.5% and 35.5%, far below the 46.8% GoPro achieved in Q3 despite similar challenges. But that also includes an expected charge of between $30 million and $35 million to the cost of revenue for obsolete tooling, and excess purchase order commitments and inventory. Excluding that charge, adjusted gross margin should arrive somewhere in the range of 44.5% and 45.5%. 

What investors want to know
So, what should investors be watching this time around?

First, note it wasn't until early December that GoPro finally lowered the price of the HERO4 Session by another $100 -- its second such decrease since launching the device in July 2015 -- to $199, so it's relatively unsurprising that GoPro indicated sell-through was particularly weak at retailers in the first half of the quarter. Listen closely, then, for whether (and to what degree) sell-through sufficiently improved in the second half, as GoPro wrapped up its all-important holiday season.

Next, recall last quarter GoPro management indicated their belief that demand was hurt on a broad basis by under-funded marketing efforts in both the second and third quarters. As a result, they began more aggressively advertising in Q3 and into the holiday season, including their first-ever return to television after a one year hiatus. Given GoPro's painful projected underperformance in the fourth quarter, it would seem this ramped-up marketing effort simply failed to adequately stoke demand.

To be fair, perhaps there was nothing GoPro could do, given not only the HERO4 Session's badly mismanaged launch, but also the fact its most popular cameras -- the higher-priced HERO4 Black and Silver models -- were first introduced way back in September 2014.

That said, GoPro is widely expected to refresh its high-end camera lineup before the end of 2016. In the meantime, the next potential catalyst to revitalize growth will come in the form of GoPro's new Karma quadcopter, which some analysts have already estimated could allow GoPro to quickly seize as much as 25% of what's currently a $1.9 billion annual consumer drone market. GoPro has promised Karma will offer a "differentiated" experience relative to its competition, and that it will launch sometime in the first half of 2016. We should listen both for confirmation that this launch is still on track, and for any hints of what, exactly, GoPro has done to set Karma apart.

Looking forward
Finally, given its current challenges, GoPro likely won't offer initial guidance for full-year 2016, but I do expect to hear management's initial thoughts on both revenue and gross margin for the first quarter.

For perspective, analysts' consensus estimates predict GoPro's first-quarter 2016 revenue will decline 17.9% year over year to $298 million in this seasonally slow period, while GoPro's own long-term model aims to maintain gross margin in the range of 42% to 44%.

We should also remember when GoPro reduced its guidance last month, it simultaneously announced a 7% workforce reduction "to better align resources to key growth initiatives." As a result, GoPro anticipates it will incur roughly $5 million to $10 million in restructuring and severance charges in the first quarter. This could potentially frustrate its ability in Q1 to live up to analysts' expectations.

If one thing is clear in the end, it's that the bar isn't set particularly high, with shares now down more than 80% over the past year as of this writing. If GoPro hopes to recapture its former status as a market darling, this week would be a great time to turn the corner.