Shariah Stock Status Report :: FACEBOOK INC :: USA :: NASDAQ :: 2nd March 2021
TICKER
FB
Company Name
Facebook INC
Shariah Compliance
COMPLIANT
DP RATIO
0.78%
TICKER | FB |
Company Name | Facebook INC |
Shariah Compliance | COMPLIANT |
DP RATIO | 0.78% |
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 2020
Segment Description
Segment Revenue
Non-permissible Revenue
% non-permissible revenue
Non - permissible segment classification
Comments
Advertising
$ 84,169
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
$ 1,796
TOTAL
$ 85,965
$ 0
0.00%
Segment Description | Segment Revenue | Non-permissible Revenue | % non-permissible revenue | Non - permissible segment classification | Comments |
Advertising | $ 84,169 | 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 | $ 1,796 |
| |||
TOTAL | $ 85,965 | $ 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 2020 - Other Income
Segment Description
Segment Revenue
Non-permissible Revenue
% non-permissible revenue
Non - permissible segment classification
Comments
Interest and dividends income
$ 672
$ 672
100%
Interest Income
Foreign exchange losses
-$ 129
Other Income -$ 34
TOTAL
$ 951
$ 672
Segment Description | Segment Revenue | Non-permissible Revenue | % non-permissible revenue | Non - permissible segment classification | Comments |
Interest and dividends income | $ 672 | $ 672 | 100% | Interest Income | |
Foreign exchange losses | -$ 129 | ||||
Other Income | -$ 34 |
| |||
TOTAL | $ 951 | $ 672 |
Dividend Purification calculation
Revenue Description
Non permissible Revenue (millions of USD)
Non-permissible operating revenue
$ 0
Non-permissible non-operating revenue
$ 672
Total Non-permissible revenue
$ 672
Total Revenue of the Company (Gross)
$ 86,637
Dividend purification ratio
0.78%
Revenue Description | Non permissible Revenue (millions of USD) |
Non-permissible operating revenue | $ 0 |
Non-permissible non-operating revenue | $ 672 |
Total Non-permissible revenue | $ 672 |
Total Revenue of the Company (Gross) | $ 86,637 |
Dividend purification ratio | 0.78% |
Financial Ratio Screen:
(All figures in millions of USD for Year ended 31st December 2020)
Particulars
Amount
Remarks
3 years Average Market
$ 572,870
Total Debt
$ 523
Islamic Debts
Adjusted Debts
$ 523
Debt Ratio
0.09%
Within limits
Cash
$ 61,954
Cash Ratio
10.81%
Within limits
Accounts Receivables
$ 11,335
Accounts Receivables Ratio
1.98%
Within limits
Particulars | Amount | Remarks |
3 years Average Market | $ 572,870 | |
Total Debt | $ 523 |
|
Islamic Debts | ||
Adjusted Debts | $ 523 | |
Debt Ratio | 0.09% | Within limits |
Cash | $ 61,954 | |
Cash Ratio | 10.81% | Within limits |
Accounts Receivables | $ 11,335 | |
Accounts Receivables Ratio | 1.98% | 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 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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