Rivian Automotive (RIVN 4.92%) has been a polarizing stock ever since its IPO last November. The electric vehicle (EV) maker initially attracted a stampede of bulls because it was backed by Amazon (AMZN -0.17%) and Ford Motor Company (F 0.41%), but the bears mauled the stock after it hit nosebleed valuations and the company abruptly reduced its production targets.

As a result, Rivian's stock price initially jumped from its IPO price of $78 to $106.75 on its very first trade, soared to its all-time high of $172.01 a week later, and subsequently plummeted to its all-time low of $19.25 in May. Today, the stock trades in the high $30s again but remains extremely volatile.

A row of Rivian's electric vehicles.

Image source: Rivian.

Should investors take a chance on Rivian right now? Let's compare the bear and bull cases to decide.

What the bears will tell you about Rivian

The bears will say Rivian's biggest backers are losing faith in the company: That it overestimated its production capabilities, its losses are still widening, and its stock still isn't cheap.

Rivian currently produces three vehicles: The R1T pickup truck, the R1S SUV, and Amazon's EDV (electric delivery van). Its R1 vehicles start at under $70,000 and can travel over 300 miles on a single charge.

Amazon initially placed an order for 100,000 EDVs, which can travel about 150 miles on a single charge, to be delivered by 2030. But this January, Amazon also agreed to start buying the electric Ram ProMaster from Stellantis, formerly known as Fiat Chrysler, in 2023.

That deal suggested that Amazon wasn't confident in Rivian's ability to fulfill its entire order. In March, Rivian confirmed those fears by halving its full-year production target from 50,000 to 25,000 vehicles as it grappled with supply chain challenges. Ford also reduced its stake in Rivian from 12% to less than 10% in May.

Even if Rivian ships 25,000 vehicles this year, it would only generate about $1.84 billion in revenue. So at its current market cap of $35 billion, its stock is still trading at 19 times this year's sales. By comparison, Tesla (TSLA 3.17%) trades at less than 11 times this year's sales.

In the first half of 2022, Rivian generated $459 million in revenue -- compared to nothing in the first half of 2021 (before it started shipping any vehicles) -- but its net loss more than tripled from $994 million to $3.3 billion. For the full year, it expects to post a net loss of $5.45 billion -- compared to its previous forecast for a net loss of $4.75 billion. That red ink makes Rivian a difficult stock to own, as rising interest rates drive investors away from speculative growth stocks.

What the bulls will tell you about Rivian

The bulls will claim that Rivian can achieve its production goals, that its higher spending isn't surprising, and that it can afford to rack up losses for years as it ramps up its production.

At the end of the second quarter of 2022, Rivian had received about 98,000 preorders in addition to its initial 100,000-EDV order from Amazon. It shipped 4,467 vehicles in the second quarter, which nearly quadrupled sequentially, and it's manufactured about 8,000 vehicles since it initiated its production last September. It also remains on track to hit its full-year production target of 25,000 vehicles.

Rivian has an annual production capacity of 150,000 vehicles. It plans to increase its annual capacity to 200,000 vehicles in 2023 with the expansion of its original Illinois plant and the planned opening of its Georgia plant, and for the combined capacity of the two sites to eventually reach 600,000 vehicles.

Therefore, investors should expect Rivian's near-term losses to widen as it ramps up its production. That pressure could eventually ease if it resolves its supply chain issues. As for its liquidity, Rivian ended its second quarter with more than $15 billion in cash, cash equivalents, and restricted cash. Its low debt-to-equity ratio of 0.2 also gives it plenty of breathing room to raise more capital.

Which thesis makes more sense?

Rivian is faring better than more speculative EV makers like Lucid and Canoo, but it still faces a grueling uphill battle before it can be comfortably compared to Tesla -- which shipped 936,172 vehicles last year -- or to traditional automakers.

Rivian's stock looks more reasonably valued than it did last year, but a lot of growth is still priced into its stock. I believe Rivian could still be worth nibbling on right now, but its high price-to-sales ratio prevents me from heartily recommending it as a long-term investment in this rough market.