• GameStop and AMC shares jumped for a second day amid the meme stock trading frenzy.
• Blackberry and Koss, other so-called “meme stocks,” also popped.
• “Roaring Kitty,” whose legal name is Keith Gill, ignited the meme stock rally on Monday with his first online post in three years.

GameStop jumped Tuesday to extend the meme stock rally started by the first online post from "Roaring Kitty" in three years, but enthusiasm seemed to cool as shares cut gains to end the session.

Shares of the video game retailer finished the day 60% higher after more than doubling at one point earlier. The rally in AMC faded a bit with shares ending the session up 32%. The movie theater operator saw shares gaining over 130% at its peak, and the rally came even after AMC raised about $250 million of new equity capital during Monday's wild trading.

GameStop and AMC each rallied over 70% Monday. The meme stock phenomenon appears to have been reignited by a recent social media update from Roaring Kitty. The man, whose legal name is Keith Gill, posted a picture on the X platform of a video gamer sitting forward on their chair — a meme used by gamers to indicate they are taking the game seriously.

It marked Gill's first post on the platform since 2021, and has since been viewed more than 23 million times. Gill followed up with a series of posts of short videos from popular TV shows and movies, although the meaning behind some of them was unclear.

Other so-called meme stocks also traded higher on Tuesday. Shares of one-time dominant smartphone maker BlackBerry popped 9%, while headphones manufacturer Koss was up 26%. Solar company SunPower climbed 60%.

"It looks like retail investors are becoming more bullish again and willing to take on more risk," Neil Wilson, chief market analyst at Finalto, said in a note. "There is no fundamental reason for the move as such - GME's last earnings report was abysmal."

In late March, GameStop said it had cut an unspecified number of jobs to reduce costs, and reported lower fourth-quarter revenue amid rising competition from e-commerce-based competitors.

'Unmistakably' echoes 2021's saga

Gill is a former marketer for Massachusetts Mutual Life Insurance. Also known as DeepF------Value on Reddit, he led an army of day traders who cheered each other on and piled into the brick-and-mortar video game stock and in GameStop call options between 2020 and 2021.

The aim was to drive up shares of certain previously unloved companies, putting pressure on hedge funds that had been betting they would decline in value.

Shares of GameStop, which hit an all-time intraday high of $120.75 in January 2021, later collapsed along with other meme stocks as interest faded. GameStop's shares have been trending down in recent years, touching a three-year low of $9.95 last month. They ended Monday at $30.45.

Analytics firm Ortex Technologies estimated that losses for GameStop short sellers came in at $868 million as of Monday's close, and stood at $1.26 billion for May.

At the price of $46 per share early Tuesday, Ortex Technologies said GameStop short sellers had lost a further $1.04 billion, pushing total losses for May to just over $2.3 billion.

"With GameStop's short interest nearing 25% of the free float, the highest level since 2022, and a staggering 150% price increase in under two days, the situation unmistakably echoes the events of January 2021," a spokesperson for Ortex Technologies told CNBC via email.

"Notably, there are no indications that short position holders have begun closing their positions. In such a dynamic market environment, monitoring short interest levels is crucial as these metrics signal when short sellers start to close their positions, potentially adding additional buying pressure to the stock," they added.

Short selling is a strategy in which investors borrow shares at a certain price, expecting the market value to fall below that level when it's time to pay for the borrowed shares.

— CNBC's Ganesh Rao and Fred Imbert contributed to this report.