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Tesla's "code red": Is Elon Musk's company on the brink of collapse?

Tesla's financial woes continue

Tesla's woes are continuing, with the company's share price slumping after Elon Musk's most recent fundraising pitch, with one analyst describing the situation at the EV company as "code red".

Tesla shares have fallen by 20 per cent this month alone, a decline seemingly sparked by Elon Musk's admission that the company could run out of money in just 10 months if its didn't reach consistent profitability.

"It is important to bear in mind that we lost $US700 million in the first quarter this year, which is over $US200 million per month," Musk wrote to investors.

"That is why, going forward, all expenses of any kind anywhere in the word, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account (will be) reviewed."

But his new laser focus on company outgoings seems to have done little to reassure investors, with shares falling to $205.08 - their lowest level since 2016.

Worryingly for investors, one major investment house - Morgan Stanley - has tipped the share price could fall to as low as $10. Though it must be said, that's the most extreme "bear" case imaginable, and the investment bank's regular prediction is much higher.

"Our revised bear case assumes Tesla misses our current Chinese volume forecast by roughly half to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government and regulatory attention,” says one Morgan Stanley analyst.

The situation at Tesla has captured the interest of analysts, with one describing it as a "situation code red".

“With a code red situation at Tesla, Musk and Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavours when the company instead should be laser-focused on shoring up core demand for Model 3 and simplifying its business model and expense structure,” says Wedbush analyst Dan Ives Ives.

Will Tesla be here in 10 years? Tell us in the comments below.