Bearish bets on stock are at an all-time high ahead of the technology firm's third-quarter earnings report on Wednesday.
Financial analytics firm S3 Partners said in a note this week that short interest currently stands at $905 million in exposure, the highest since the fitness tracker maker first listed on the stock market in June 2015.
As a percentage of the float, S3 Partners estimates that as much as 50 percent of shares are now being borrowed by short sellers.
Shorting a stock involves an investor borrowing a security and selling it. If the share price then falls, the investor will buy it back and make a profit. Short interest refers to the amount of short positions that have not been closed.
Another data firm IHS Markit, also said that Fitbit short interest was at a record high, but offered slightly different figures. Short interest as a percentage of the float was pegged at 33 percent.
Fitbit reports third-quarter earnings on Wednesday. The company beat market consensus in the second-quarter in August and later that month released two new devices – the Charge 2 and Flex 2 – which it hopes will help continue earnings momentum.
Still, investors are not convinced about the growth path for Fitbit with shares of the firm down over 55 percent this year.
And even though the share price has fallen, the absolute number of shares shorted by investors has more than doubled from 20 million at the start of the year to 47 million now, IHS Markit said.
"Fitbit shares are only up 10 percent from its all-time low of $11.89 hit back in June of this year, and if the company doesn't step up on Wednesday, it is not out of the question that shares can re-touch that level or head even lower with the help of short sellers," S3 Partners said in a note from Monday.
Much of the negativity towards the stock has come from concern over competition but shares of the firm may have bottomed, according to analysts.
"I think the principle concern is competitive risk in terms of primarily as Apple is growing through the (Apple) Watch strategy and because Apple is placing a lot of emphasis on the fitness that is seen as a threat to Fitbit," Neil Campling, senior research analyst at Northern Trust Securities, told CNBC by phone.
"Whilst there are risks about consumer product technology, everything has a price and I wouldn't be shorting it here. The trade has passed and we know where the risk has played out, so there isn't too much downside from here. But clearly it's too early to get a proper read on what sales will be like in the key holiday quarter."