Anyone know if vanguards VTI is immune from such practices?
vti is free float adjusted, so not as susceptible. But: Elon will naturally do everything in his power to pump his stock, as every CEO does, and VTI buys shares in proportion to how successful that is. That is the nature of passive, market cap weighted investing. If you want to underweight Elon's companies, or, generally, weight companies based on something besides market cap, you have to get into active or factor in…
When a stock drops in value, the dollars don't flow anywhere, they just disappear. Think about this: For every buyer ("putting money in a stock") there is a seller ("taking money out of a stock') at exactly the same price. So dollars aren't "in" a stock at all - the shares exist and are said to have some dollar value based on the recent trading price or open orders in the market. When the price drops, it's because the collective consensus on how much those shares are worth changed, and the dollars assumed to have exist prior are just gone.