GameStop (GME) shares declined 5% on Tuesday following the meme stock's 21% gains in the prior session that were ignited by a social media post late Sunday from an account believed to be tied to the video game retailer's most public supporter.
Shares of the video game retailer rose as much as 75% Monday after the user behind "Deep F***ing Value" posted a screenshot on Reddit's Superstonk subreddit late Sunday, which purported to show they paid nearly $175 million building a position in GME shares and call options.
Late Monday, the Wall Street Journal reported that executives at Morgan Stanley's trading platform E-Trade had discussed a potential ban on the account believed to be tied to individual investor Keith Gill.
GameStop was also one of the numerous stocks impacted on Monday by a technical glitch at the New York Stock Exchange.
"Really there's no reason to be banning him from their platform," said Bill Capuzzi, CEO at Apex Fintech Solutions, a broker dealer. "I think it's actually a black eye for Morgan Stanley to take this position. It's no different than someone like Warren Buffett putting out 13F filings for Berkshire Hathaway ... I don't see anything wrong with what he's done."
Steve Sosnick, Interactive Brokers chief strategist, warned investors against chasing Monday's rally.
"Is whoever controlling this account doing this in your best interest or in their best interest? And, really, you should think that one through because, to me, it [is] pretty obvious whose interest it's in," Sosnick told Yahoo Finance.
"If you're chasing the stock up here, you're more likely than not the source of liquidity for whoever is controlling this account to sell into your enthusiasm."
Gill, credited with igniting the meme stock rally back in 2021, is also known as "Roaring Kitty" on X and YouTube.
Monday's surge came after GameStop rallied 180% over a span of two days back in mid-May after Roaring Kitty posted for the first time on X, formerly known as Twitter, since 2021.
Last month's rally was short-lived, and analysts warned the meme action this time around was a far cry from the level of retail inflows seen in 2021.
Still, GameStop capitalized on May's rally, selling 45 million shares and bringing in around $930 million in proceeds. The stock surged 25% on the news.
Typically, investors would expect the stock price of a company issuing new shares — which dilute the value of current holdings — to decline after a stock sale.
AMC (AMC) also capitalized on the meme frenzy, raising $250 million through the sale of 72.5 million shares last month.
AMC shares closed Tuesday's session little changed after gaining 11% on Monday.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.