Shariah Stock Status Report :: FACEBOOK INC :: USA :: NASDAQ :: 23rd July 2020
TICKER
FB
Company Name
Facebook INC
Shariah Compliance
COMPLIANT
DP RATIO
0.99%
TICKER | FB |
Company Name | Facebook INC |
Shariah Compliance | COMPLIANT |
DP RATIO | 0.99% |
Business sector screening:
Facebook Inc. is a social media and social networking company based in United States. Among the notable brands, the company owns Instagram as well as WhatsApp. The company derives its revenue from two major segments:
• Advertising: consists of advertising revenue generated from Facebook, Instagram, Messenger and others.
• Other revenue: consists of revenue generated from delivery of consumer hardware devices, net fees received from developers using the Payments infrastructure and revenue from various other sources.
The tricky areas from a Shariah perspective are:
1. Advertising: The kind of advertising services provided i.e. textual, pictorial, marketplace model with controls or generic advertising properties.
2. Content: The content displayed on platforms owned by Facebook such as Instagram, Whatsapp, Facebook.
Regarding the Advertising platform of Facebook:
i. Facebook does not produce any advertising content of its own.
ii. Facebook has a controlled ad publishing policy which prohibits 30+ areas such as Illegal products or services, Illegal products or services, Tobacco and related products, Drugs and drug-related products, Adult products and pornography, Weapons etc. A full list can be seen here: https://www.facebook.com/policies/ads/
Regarding the content displayed on Facebook/Instagram etc.:
i. Facebook does not control the kind of content displayed. The content is owned and displayed by the users. Hence, Facebook provides tools for sharing content and hence has no say over what is being displayed.
ii. Ethical restriction: Facebook has a policy of removing content such as nudity or other sexually suggestive content, Hate speech, Fake content etc.
Given the above restrictions, it seems there can be a positive, Shariah permissible usage of Facebook Inc's products
Lets analyze the revenue streams of Facebook to ascertain its business sector compliance.
Segment break up
Operating Revenue in Millions of USD for Year. ended 31st December 2019
Segment Description
Segment Revenue
Non-permissible Revenue
% non-permissible revenue
Non - permissible segment classification
Comments
Advertising
$ 69,655
The company's advertising polices and the advertising content is subjected to various regulations. Hence, the revenue from this segment is considered permissible. For reference: https://en-gb.facebook.com/policies/ads/
Other revenue
$ 1,042
Google Network Members' properties
$ 21,547
TOTAL
$ 92,244
$ 0
0.00%
Segment Description | Segment Revenue | Non-permissible Revenue | % non-permissible revenue | Non - permissible segment classification | Comments |
Advertising | $ 69,655 | The company's advertising polices and the advertising content is subjected to various regulations. Hence, the revenue from this segment is considered permissible. For reference: https://en-gb.facebook.com/policies/ads/ | |||
Other revenue | $ 1,042 |
| |||
Google Network Members' properties | $ 21,547 |
| |||
TOTAL | $ 92,244 | $ 0 | 0.00% |
|
Total Revenue
$ 92,244.00
Non-permissible Operating revenue
$ 0.00
% of non permissible revenue
0.00%
Total Revenue | $ 92,244.00 |
Non-permissible Operating revenue | $ 0.00 |
% of non permissible revenue | 0.00% |
Since the revenue from non-permissible operating income of the company is less than 5%, FACEBOOK INC. PASSES the BUSINESS SECTOR Screening
Sector Compliance
PASS
Non-operating Revenue in Millions of USD for year ended 31st December 2019 - Other Income
Segment Description
Segment Revenue
Non-permissible Revenue
% non-permissible revenue
Non - permissible segment classification
Comments
Interest and dividends income
$ 924
$ 924
100%
Interest Income
Other
$ 27
TOTAL
$ 951
$ 924
Segment Description | Segment Revenue | Non-permissible Revenue | % non-permissible revenue | Non - permissible segment classification | Comments |
Interest and dividends income | $ 924 | $ 924 | 100% | Interest Income |
|
Other | $ 27 |
| |||
TOTAL | $ 951 | $ 924 |
| ||
|
Dividend Purification calculation
Revenue Description
Non permissible Revenue (millions of USD)
Non-permissible operating revenue
$ 0
Non-permissible non-operating revenue
$ 924
Total Non-permissible revenue
$ 924
Total Revenue of the Company (Gross)
$ 93,195
Dividend purification ratio
0.99%
Revenue Description | Non permissible Revenue (millions of USD) |
Non-permissible operating revenue | $ 0 |
Non-permissible non-operating revenue | $ 924 |
Total Non-permissible revenue | $ 924 |
Total Revenue of the Company (Gross) | $ 93,195 |
Dividend purification ratio | 0.99% |
Financial Ratio Screen:
(All figures in millions of USD for Quarter ended 31st March 2020)
Particulars
Amount
Remarks
3 years Average Market
$ 5,19,942
Total Debt
$ 470
Islamic Debts
Adjusted Debts
$ 470
Debt Ratio
0.09%
Within limits
Cash
$ 60,289
Cash Ratio
11.60%
Within limits
Accounts Receivables
$ 7,289
Accounts Receivables Ratio
1.40%
Within limits
Particulars | Amount | Remarks |
3 years Average Market | $ 5,19,942 | |
Total Debt | $ 470 |
|
Islamic Debts |
| |
Adjusted Debts | $ 470 |
|
Debt Ratio | 0.09% | Within limits |
Cash | $ 60,289 | |
Cash Ratio | 11.60% | Within limits |
Accounts Receivables | $ 7,289 | |
Accounts Receivables Ratio | 1.40% | Within limits |
Since all the Ratios are within the limit, the stock passes the Financial ratios screen
Financial Ratio compliance
PASS
Source:
All the above information is based on the website of the company, Annual financial report for 2019 and the latest Quarterly report of 31st March 2020
Conclusion:
Given the above information, we believe FACEBOOK INC is a Shariah Compliant company as per the Shariah screening Criteria.
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