GoPro Pins Hopes on Drones as Revenue Forecast Takes a HitThe company says it plans to trim its workforce by 7 percent.

GoPro Inc.'s disappointing fourth-quarter revenue forecast showed that its action cameras are losing traction with customers, with analysts expecting the company's fortunes to turn only after a successful launch of commercial drones.

Shares of the company are set to open down 26 percent at $10.80 on Thursday -- a huge drop from the high of $98.47 it touched in July 2014.

The wearable camera maker said on Wednesday it expects revenue of about $435 million for the fourth quarter, well below the average analyst estimate of $511.9 million.

Wall Street's reaction was severe -- JMP Securities slashed its price target on the stock to $21 from $90, while J.P. Morgan halved its target to $21 from $42.

Cowen & Co. was the most bearish with a $11 price target, which it revised from $18.

GoPro said quarterly revenue was hit by a price cut meant to boost demand for its Hero4 Session cameras. The company launched the flagship camera in July for $399.99, but slashed its price by $100 two months later.

"We expect a temporary pause in growth to persist for at least a quarter or two as the firm burns through lower margin Session inventory," J.P. Morgan analysts wrote in a note.

GoPro's helmet- and body-mounted cameras are popular with surfers, skydivers and other adventure sports enthusiasts, but recent advancements in video-shooting capabilities of smartphones is likely eroding GoPro's consumer base.

Some analysts said they expect investments made in 2015 to develop new products to help the company in the latter part of this year.

"We believe the next positive catalyst for GPRO may not arrive until Q2 at the earliest, with the introduction of the quadcopter and other potential product updates, including Hero 5 and the company's long-awaited new editing and sharing platform," Baird Equity Research analysts wrote in a note.

GoPro plans to introduce quadcopters in the first half of 2016 and has been putting outteaser videosto gauge the landscape before a full launch.

The company, which said on Wednesday it plans to trim its workforce by 7 percent, is also expected to launch virtual reality technologies and update its editing software this year to reaccelerate growth.

"A long-awaited major software platform revision remains key, in our view, to improve the user experience and cut the time commitment to create and share edited videos, especially to attract more casual users," Cowen & Co. analysts wrote.

(Reporting by Supantha Mukherjee in Bengaluru; Editing by Saumyadeb Chakrabarty)