Care to explain the mechanics? I’m an investor (both in passive and more active vehicles) and don’t understand what you mean.
They own more of bigger companies than small.
There's the option of "equal weight" or other strategies but the overwhelming majority is market cap weighted.
Index funds are also really, really big now and contain a lot of money earmarked for retirement/pensions.
In theory if you had a temporarily very frothy market into which you could sell a part of your unprofitable company to some people at a very high valuation, index funds would then mechanically move in and need to purchase and add significant support for insiders to sell into.
Due to the high valuation, index funds are required to buy SpaceX stock, which Elon will presumably slowly sell them in order not to crash the stock. The funds will be left holding the stock, while eventually the price will crash, because the company will simply not make enough money to justify the valuation.
Musk owns about 50% of SpaceX. You are saying he is planning to sell the vast majority of that holding at a gradual pace that will not be noticed by anyone but fast enough to get a high price?
Many investors haven’t figured that out yet but they will eventually and they will be the ultimate bag holders once the bubble bursts for Tesla for good.
There are other companies that are remnants of what they were but they still survive on hype. It just takes a long time for them to die. Another example of that is IBM. They are functionally done in the tech world. It just takes a long time to die other companies that fit that mold is Xerox and Kodak still floating at a much lower level, but they are functionally done.
