Image source: Fitbit.

There's some good and bad news -- and a second serving of bad -- for Fitbit (NYSE:FIT) investors. Longbow analyst Joe Wittine is chiming in on the leader in wearable fitness this morning, and the good news is that Fitbit dominated the Black Friday best-seller list at (NASDAQ:AMZN) and Target (NYSE:TGT)

Target put out a press release detailing its success on Black Friday, pointing out that it experienced a 50% spike in wearables compared to a year earlier. It singled out the Fitbit Charge HR by name. Amazon didn't announce the success of Fitbit's wares, but the online retailer makes it easy to sort by the top sellers.

Selling briskly would seem to be the best kind of news imaginable for Fitbit, but there's more to the initial snapshot here. Longbow's analyst points out that steep discounting is what helped catapult Fitbit's products to the top of the heap. Fitbit Charge 2 is selling for $129.95 on Amazon at the moment, $20 less than its retail price. Markdowns are natural, but this is a product that hit the market just two months ago.

Wittine's other morsel of unpleasant news is that internet searches for Fitbit on Black Friday dropped 11% since the prior year. It's clear that wearables themselves are as hot as ever, but the influx of competition could be weighing on Fitbit's undisputed dominance.

Getting back on track

Fitbit isn't on the cusp of irrelevance, and a little heartier than usual discounting isn't the end of the world during the cutthroat holiday shopping season. Most retailers continue to sell the Fitbit Charge 2 at $149.95 (or $179.95 for the high-end model). The Fitbit Charge HR that Target called out by name is actually an older model, making it an easy target for doorbuster markdowns. 

However, it's not as if investors are waking up to the possibility that Fitbit is going through a rough patch. The stock has now been trading in the single digits for 16 consecutive trading days, buckling below the double digits after posting a poorly received report for the third quarter. 

Revenue growth slowed to a 23% clip for the quarter with earnings going the wrong way as margins continue to contract. However, the unsettling gem in the report was Fitbit's guidance, calling for revenue to climb a mere 2% to 5% during the holiday quarter with an even bigger decline in profitability. 

Target may be selling 50% more wearables than it was a year earlier, but Fitbit's guidance would seem to suggest that it's losing market share in that scenario. With leaner markups in today's more competitive climate, it's easy to see why Fitbit has a lot to prove this holiday shopping season -- even if it's topping the best-seller list. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.