Fitbit is plunging after slashing its guidance

Shares of Fitbit are down 9.2% at $6.55 a share after the company announced preliminary fourth quarter results that are well below its previous estimate.

In a release sent out on Monday, Fitbit said it expects to announce that it sold 6.5 million devices in the crucial holiday quarter and said that fourth-quarter revenue would be between $572 million to $580 million, well below its previous guidance range of $725 million to $750 million.

"Fourth quarter results are expected to be below our prior guidance range; however, we are confident this performance is not reflective of the value of our brand, market-leading platform, and company's long-term potential," James Park, Fitbit co-founder and CEO said in a statement. "To address this reduction in growth and what we believe is a temporary slowdown and transition period, we are taking clear steps to reduce operating costs."

As part of its cost-cutting effort, Fitbit is:

• "Targeting a reduction in the 2016 exit operating expense run rate of approximately $200 million, to approximately $850 million for 2017"
• "Conducting a reorganization of its business, including a reduction in force, that will impact approximately 110 employees, constituting approximately 6% of the company's global workforce, creating a more focused and efficient operating model."

The company says the reorganization efforts will save about $4 million in the the first quarter of 2017.

Shares of Fitbit had a rough 2016, tumbling 75% amid an increasingly competitive market for wearable devices. In November, the company slashed its earnings-per-share guidance for the crucial holiday quarter to just a quarter of what analysts had been expecting.