From the Adventure Time wiki:
In the episode "The Limit," Jake's Stretchy Powers are put to the test. It is revealed that while Jake can stretch his body to incredible lengths, he does have a limit. As he approaches this limit, his body becomes dangerously thin. Once his mass is distributed along a certain length of his body, it becomes difficult for him to support himself; at one point, Jake was forced to walk along the ground. If he were to stretch beyond his absolute limit, it is presumed that he would completely thin out and die.
In the episode "The Limit," Jake's Stretchy Powers are put to the test. It is revealed that while Jake can stretch his body to incredible lengths, he does have a limit. As he approaches this limit, his body becomes dangerously thin. Once his mass is distributed along a certain length of his body, it becomes difficult for him to support himself; at one point, Jake was forced to walk along the ground. If he were to stretch beyond his absolute limit, it is presumed that he would completely thin out and die.
It's also worth noting that Pen Ward has said in an interview that Jake uses his powers lazily and doesn't know their full extent.
