Investing in the stock market is a common way to grow wealth, but for Muslim investors, the decision to buy shares in a company involves more than just financial analysis.
It requires ensuring that the company you’re investing in aligns with Islamic principles. One of the most debated stocks in this regard is Amazon.
As one of the largest and most influential companies globally, Amazon’s operations span various sectors, raising questions about the permissibility of its stock under Islamic law.
This article we’ll answer is Amazon stock halal or haram considering all the factors, offering a comprehensive look at both financial and ethical considerations.
Is Amazon Stock Halal?
No, Amazon stock is not halal because of sells haram products along with halal products.
However, some people argue that its overall business model and financial practices are halal and require a nuanced examination to fully understand its compliance with Islamic principles.
So let’s understand it in different steps:
Nature of Amazon’s Business
Amazon’s business model involves selling a wide range of products, including both halal and haram items such as haram drinks and pork products.
The direct involvement in selling haram products makes the stock non-halal for Muslim investors.
However, here some people also say that it’s the seller who sells such products but the business model is to provide a platform.
If we look at this business model deeply, you’ll learn that from each seller Amazon charges in different ways for each product they sell. So if amazon charges anything from those sellers like an FBA fee, referral fee, and more that earning is haram.
So it’s clear that the overall earning of Amazon also comes from haram products.
Financial Practices and Interest (Riba)
Islamic finance prohibits any involvement with riba (interest). Amazon, like many large corporations, engages in interest-bearing loans and earns interest on its cash reserves.
This involvement in interest-based transactions further complicates its halal status, as earning or paying interest is not permissible under Sharia law.
Debt-to-Equity Ratio
The debt-to-equity ratio is a key metric in Islamic finance. Islamic scholars often set thresholds, such as a maximum of 33% debt-to-equity ratio, to determine halal compliance.
Amazon’s financial structure includes significant debt, which may exceed this threshold, making it non-compliant with Islamic finance principles.
However, it keeps changing so check the latest data.
Income from Non-Compliant Activities
Islamic scholars also consider the percentage of income derived from haram activities.
Typically, if more than 5% of a company’s revenue comes from non-compliant activities, the stock is considered non-halal.
Given Amazon’s diverse revenue streams, including those from haram products, it likely exceeds this threshold. However, there is no perfect data on this so it’s better to avoid it.
Scholarly Opinions
Despite the general consensus, some scholars argue that investing in Amazon might be permissible if the investor purifies their earnings by donating a portion of the income derived from haram activities to charity.
This view suggests a more nuanced approach, allowing for partial compliance under specific conditions.
However, many scholars maintain a stricter stance, deeming any investment in a company involved in haram activities as impermissible.
According to our research also, it’s better to avoid such things until you’ve fixed the percentage.
So this is all why it’s better to avoid Amazon stock. Still, if you want to invest it’s your decision but not recommended.
You might also like to know is Apple stock halal or is Google stock halal.
Conclusion
In short, Amazon stock is not completely halal because it involves the sale of haram products and engages in interest-based financial practices.
While some argue that partial compliance might be achieved through the purification of earnings, the predominant view among Islamic scholars is that Amazon stock does not meet the criteria for a halal investment.
Muslim investors should seek alternatives that align more closely with Islamic principles.
