Is Facebook Shariah Compliant? Check Shariah Stock status report of Facebook INC
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Shariah Stock Status Report :: FACEBOOK INC :: USA :: NASDAQ :: 23rd July 2020

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%

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

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%

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

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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