You're correct, but your assertion needs a qualifier: it's hard for small investors to make a long-term bet that a stock will go down.

Large investors do not need to purchase index funds, instead they can direct index and purchase the underlying stocks directly. If you're a small investor, the index funds offer diversification but without the ability to divest from individual stocks covered by the index; large investors that are direct indexing can just decide to exclude meme stocks and not buy them, and in so doing make a long-term bet that those stocks will underperform the rest of the index (and without needing to pick a specific date by which that underperformance will happen, unlike a short).

There's an argument to be made that there should be a maximum share price (stocks that reach the maximum trigger an automatic stock split), and that stocks should be allowed to trade for fractions of a penny (after all, what really prevents this in a day and age where all trades are electronically settled? Nobody needs to cash out for literal copper pennies...). Much smaller individual share prices would make it more feasible for smaller investors to build direct indexing strategies.

True, though there are some ways of even relatively small investors doing direct indexing.

But when you start modifying the index you're not really indexing anymore ...

And this is not really a bet against the stock, just a value tilt away from it betting that there are better performance elsewhere. You don't make money because TSLA tanked, you make money (or don't lose money) because your money was elsewhere.