GameStop, AMC slide further as meme stocks rally tapers off

Despite the losses on Wednesday, the two companies were among the top three most-traded shares by during the session, data from showed.

The sharp surge in the shares began after a series of posts from Keith Gill's X account "Roaring Kitty", whose bullish posts on GameStop was a reason for the 2021 frenzy.

But unlike 2021, when banded together to target highly shorted that burnt bearish , this time too were part of the meme stock mania, , which tracks retail investor flows, said.

"The short sellers three years ago were completely surprised by the magnitude of the mass purchases and ultimately overwhelmed by the size of the short squeeze," said Rick Meckler, partner at .

"They have likely learned from that experience and left themselves less exposed thereby reducing the potential for extended upward pressure."

fund placed a new bet for GameStop shares to rise further and significantly increased its long position in AMC during the first quarter.

GameStop stock was still nearly 70% below its 2021 peak, while AMC, which hit a record low last month, was 98% off its all-time high.

Since his first post on Sunday, Gill has out more than 50 movies clips a day on X.com. He did not respond to a Reuters request for comment on what the posts mean and whether he planned on making his investments public again.

Former U.S. SEC Chair Jay Clayton told CNBC on Wednesday the posts have triggered "a wave of euphoric and speculative buying in the retail (trading) community which is never a good thing", adding that it was not illegal to say "I like a stock".

remained strong. GameStop and AMC were among the top ten securities with highest options volume on Wednesday, with majority of traders buying call options, which bet on a stock's rise, data from Options Clearing Corp showed.

The pace of borrowing for by U.S. investors, however, has been restrained compared to the GameStop short squeeze in January 2021, J.P.Morgan strategists said in a note.

"Retail investors are once bitten twice shy after they ended up losing a lot of money last time round," said Ben Laidler, global strategist at digital brokerage eToro.

"Even though there are more retail investors today, you're not seeing that follow through into the rally this time as you saw last time."

Other highly shorted stocks that caught a bid this week were choppy on Thursday. Tupperware fell 1%, while U.S.-listed BlackBerry shed 2.3%. Koss Corp slid 6% to $4.67.

(Reporting by Medha Singh and Pranav Kashyap in Bengaluru; Editing by Arun Koyyur)