Is Amazon Halal? Can We Invest In Amazon?

Is Amazon Halal_ Can We Invest In Amazon_

Is Amazon Halal? Investors are usually searching for famous, international stocks such as Tesla, Apple, Amazon, etc. Of course, as a Muslim investor, you may be interested in knowing if these stocks are Sharia-Compliant. In today’s article, we will discuss Amazon stock and check if it is safe and halal to invest in.

As we know, Amazon is a tech company that focuses on cloud computing, e-commerce, and it also offers Kindle that was massively consumed by lots of book-lovers.

3 Financial Ratios

To comprehend if Amazon stock is halal, we will use the 3 following criteria,

1. The business model

2. Interest-bearing debt to market capitalization

3. Interest-bearing securities to market capitalization

The Business Model

Amazon provides different services and goods to its clients through its online sites. In the breakdown of Amazon’s business, we can find 5 business segments. Among these five, physical stores and subscription services contribute more than 5% of Amazon’s non-permissible revenue.

Though these sectors are not inherently haram, you may be concerned if the content or the product of these segments are fully halal. For example: In physical stores where it sells foods, you can find haram products such as alcohol, pork, tobacco. Moreover, Amazon gives access to non-permissible entertainment content (which is haram according to Sharia) for its subscribers.

Is Amazon Halal?

According to the data at Musaffa, the company’s impermissible business activities account for only 0.19% of its overall revenue. However, 99.81% of total revenue comes from questionable activities. So, Amazon does not pass from the first criteria of halalness, since its questionable business activities exceed 5% of its total revenue.

Interest-Bearing Debt to Total Assets Ratio

Secondly, we conduct a financial screening analysis. Certainly, we screen the company’s interest-bearing debt ratio. The interest-bearing debt should not exceed 30% of the company’s market capitalization. In Amazon’s case, the percentage of interest-bearing debt is 4.60% of its market capitalization. Therefore Amazon passes this stage.

Total Debt$64.36B
Market Cap$1.40T

Illiquid assets to total assets ratio

Finally, we need to screen for interest-bearing securities. Amazon’s interest-bearing securities account for 4.75% of its market capitalization. The total amount of securities that earn interest should not exceed 30% of its market capitalization. 

Cash & Equivalents$66.45B
Market Cap$1.40T

Although Amazon stock fulfils 2 of the above criteria, it fails from the first one. Therefore, Amazon is considered to be one of the doubtful stocks. This is the reason why stock screening companies such as Musaffa does not include Amazon in the list of top halal stocks.

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Besides, feel free to sign up for our free stock screening services at musaffa.com.