Gamestop Corp is one of the questionable stocks available in the USA market and you may want to understand why we can not place it on our halal stock list.
Business Activities of Gamestop
GameStop Corp was founded in 1996, and its headquarter is located in Grapevine, Texas. The company engages in the retail of games, entertainment products, and wireless services in the United States, Canada, Australia, and Europe. The firm sells video game hardware and software, accessories, mobile, consumer electronics products, and other goods. The company represents its products in its stores and e-commerce sites under the GameStop, EB Games, and Micromania brands. The company currently has 12,000 full-time employees in over 4,816 stores.
Is Gamestop stock halal?
Firstly, we analyze the business activity of GameStop to know if it is a halal or haram stock. The company deals with impermissible business activities and it accounts for a significant 0.22% of overall revenue. Moreover, 35.09% of its total revenue comes from doubtful activities. Consequently, we cannot say it is halal as a subsequent percentage of its income derives from impermissible and questionable business activities. Gamestop’s compliance status is doubtful.
Secondly, we conduct financial screening analyses. We screen its interest-bearing debt ratio, and the debt amount should not exceed 30% of its market cap. In the case of GameStop, the percentage of interest-bearing debt is 0.73% of its market cap. So, we can say that it passes this criterion.
| Total Debt | $42.30M |
| Market Cap | $ 5.79B |
Finally, we need to screen interest-bearing securities. Gamestop’s interest-bearing securities account for 18.7% of its market cap, while the number of securities that aim to receive interest should not exceed 30% of its market cap. Consequently, it fails from the third criteria.
| Cash & Equivalents | $1.08B |
| Market Cap | $5.79B |
Even though Gamestop successfully passes two screening criteria, most of its revenue comes from questionable business activities and fails business activity screening. Therefore, the Gamestop stock is marked as “Doubtful” at Musaffa, and we do not suggest Muslims invest in this stock.
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