Many ETFs (SPY being the biggest example), funds, other indices, etc. etc. etc. have legal fiduciary obligations to track the S&P 500 index. SPX is market cap weighted, bigger companies get a bigger piece of the pie than smaller ones.

TSLA will be entering near the top.

Just SPY has ~$320 billion under management. If the rebalance were to happen today (to my best quick calculation), TSLA would make up 1.2% of the S&P 500 index.

Just the SPY fund would have to buy just under $4 billion dollars of TSLA stock (more than 1% of the total shares) and sell an equal amount of the rest of their portfolio.

Many many other funds would have to do the same.

We're talking about tens of billions of dollars of stock sell orders.

>Why would they sell stock? You can buy shares with cash and you can source cash many ways.

The various funds are obligated to allocate their managed assets to match the index weighting. We're not talking about a small fund, but a significant portion of the entire market reallocating assets.