The San Mateo-based company, which had 1,254 emplyees as of September 30, is reducing that number to fewer than 1,000.
In its earnings report, the company said that although the Karma "reached the #2 market position in its price band in 2017, the product faces margin challenges in an extremely competitive aerial market".
The disappointing outlook sent shares plummeting almost a third to an all-time low of $5.04 in morning trading Monday. It had entered a partnership with DJI, according to Tech Crunch, before DJI backed out, leaving GoPro to develop the Karma drone on its own.
Michael Pachter, of Wedbush Securities, said GoPro became a victim of both hubris and desperation as it tried to make a go of it in the drone sector. The company has always been criticized by investors for failing to diversify its product line away from its action cameras, which cater mainly to extreme sports enthusiasts. That followed multiple reports of technical issues, which caused the drones to drop from the sky as they were flying.
Along with the job cuts and plans to get out of the drone business, GoPro released preliminary fourth-quarter results, which didn't do anything to inspire investors' confidence.
"GoPro is committed to turning our business around in 2018", said Woodman in a statement.
Morgan Stanley said in a research note earlier Monday that the price cut for the Hero6 camera would make earnings growth hard in fiscal 2018. A buyer could leverage GoPro's brand and gain profit contributions from device sales, analysts said.
GoPro promised continued support for existing Karma drones. "We expect that going forward, our roadmap coupled with a lower operating expense model will enable GoPro to return to profitability and growth in the second half of 2018". Later in the day, GoPro CEO Nick Woodman told Bloomberg the company would be open to sale, but isn't actively shopping itself.