NEW YORK (TheStreet) -- Investors will be paying close attention to Tesla's (TSLA) - Get Report capital structure in its 2016 third quarter report, due out after tomorrow's closing bell, Kynikos Associates founder Jim Chanos said on CNBC's "Halftime Report" on Tuesday afternoon.
"Unless [CEO Elon Musk] suspends the law of arithmetic, I don't see how they avoid it," Chanos said.
Earlier this month, Musk tweeted that Tesla and SolarCity (SCTY) won't need to raise capital in the fourth quarter of 2016. Tesla agreed to buy SolarCity for $2.6 billion in August.
"What if they're right that they don't have to raise the capital that people think that they will?" CNBC's Andrew Wapner asked.
Tesla will definitely have to raise capital in the 2017 first quarter, if not in the 2016 fourth quarter, Chanos responded.
The acquisition of SolarCity is still a concern for some investors, including Chanos.
"You are taking on this huge amount of risk, adding to your negative cash flow woes and what is the grand plan here besides the solar panel roof? There's got to be something because the deal for most observers, not just the shorts, seems to just be baffling," he explained.
For the 2016 third quarter, analysts surveyed by FactSet are expecting a loss of 58 cents per share on revenue of $2.33 billion. For the same quarter last year, Tesla reported a loss of 58 cents per share on $1.24 billion in revenue.
Shares of Tesla were higher in mid-afternoon trading on Tuesday.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings team rates Tesla as a Sell with a ratings score of D+. This is driven by several weaknesses, which the team believes should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks the team covers.
You can view the full analysis from the report here: TSLA