Is Tesla Stock Halal: Are you intending to buy Tesla stock but worried about whether is Tesla Stock halal? We have all the answers for you.
When it comes to Tesla, the company’s main business operations include the production and distribution of electric cars, energy storage devices, and renewable energy solutions. Even while most of these activities follow socially and environmentally conscious guidelines, some parts of the company may still need to be assessed from an Islamic finance standpoint.
Tesla has an extremely positive ESG effect, has no meaningful dependency on interest, and does not derive a significant portion of its revenue from haram sources. This examination of Tesla’s financial parameters leads to conclude that the stock is Sharia-compliant. Let’s read about “Is Tesla Stock Halal”.
Is Tesla Stock Halal Or Haram?
Experts in Islamic finance believe that investing in Tesla shares is highly halal. The majority of Tesla’s leasing contracts’ revenue, which accounts for just 2.9% of the company’s overall revenue, is thought to be halal.
What Is The Performance Of Tesla Stock In The Past Year?
Tesla is the world’s 3rd Shariah-compliant most valuable company with a market cap of $528.59 billion.
In this article, we shall see all financial aspects to analyze the fact that whether or not investing in Tesla’s stock is compliant with Islamic teachings.
Over the last year, Tesla’s stock has experienced a very dramatic run. Key points are as follows:
- November 4, 2021, marked the closing price of Tesla stock at its all-time high of $409.97.
- Tesla’s stock price reached a 52-week high of $314.67, which is 23.8% more than its current share price.
- The current share price of Tesla is 60.8% lower than its 52-week low, or $101.81, the company’s stock price.
- Over the previous 52 weeks, the average price of Tesla’s shares has been $210.46.
- Tesla’s 5-year price total return is 1020.3%.
According to these figures, the price of Tesla stock has fluctuated significantly over the previous 12 months. It hit an all-time high and experienced highs and lows all year long. Over a five-year period, Tesla stock has returned more than a hundred percent of its initial investment.
What Are the Financial Guidelines To Call Tesla Stocks Halal? Is Tesla Stock Halal?
The following financial criteria are typically taken into account when deciding if Tesla stock is halal:
- Manufacturers of haram products, Tesla does not engage in interest-based business (riba).
- To make sure Tesla satisfies specific requirements, its financial ratios are examined. These standards consist of Debt carrying interest compared to total assets: This proportion ought to be lower than 33%.
- The financial and operational procedures of Tesla ought to abide by Sharia law.
What Is The Interest-bearing Debt To Total Assets Ratio For Tesla Stocks?
The following are some pertinent financial ratios and numbers regarding Tesla’s debt:
- Total liabilities to total assets ratio:
Between fiscal 2015 and 2019, Tesla’s capital structure ratio was over 80%, which indicates a much higher proportion of liabilities compared to equity. Since then, though, Tesla’s capital structure has shifted further towards the stock.
- Debt-to-equity (D/E) ratio:
As of the end of 2018, this ratio was 3.71, meaning that Tesla had raised over $6 billion in equity but was carrying over $23 billion in debt. Finally, Tesla’s debt-to-equity ratio as of March 31, 2023, was 0.78.
- Total debt to total assets ratio:
This ratio was 6.4% in the last quarter.
What Makes Stocks Investment Halal?
To ascertain if an investment in stocks is halal, the following rules are commonly observed:
- Prohibited Industries:
Stock from businesses engaged in illegal activities, such as those involving alcohol, gambling, pork, or guns, should not be purchased.
- Interest (Riba):
Since interest is regarded as haram in Islamic finance, the investment should not involve receiving or giving interest.
- Ethical and Social Responsibility:
The business shouldn’t engage in unethical or careless social practices.
- Financial Stability:
The organization ought to be debt-free and in a healthy financial position.
- Profit and Loss Sharing:
Encouraging investors to partake in the company’s gains and losses by Islamic finance principles.
- Sharia Compliance:
The investment ought to be compliant with Sharia law.
Frequently Asked Questions
Is it halal to buy Tesla shares?
Purchasing Tesla shares is widely regarded by Islamic finance experts and investment firms as halal since it does not involve any sectors of the economy that are deemed haram, such as those related to gambling, alcohol, pork, or firearms.
Is Coca Cola a halal stock?
A lot of screeners filter Coca-Cola as a halal stock. The revenue obtained from products classified as haram does not surpass 5%. However, Coca-Cola’s operations continue to rely heavily on riba (interest).
Is Apple a halal investment?
Islamic finance academics and investment companies typically view Apple shares as lawful or halal. It’s unclear how much Apple makes specifically from haram, and whether it makes up more than 5% of its overall revenue.
Thus, to conclude whether is tesla stock halal can be answered yes it is halal. However, you should always be keen on the company’s performance to decide whether or not to put your trust in it.
Islamic finance principles prohibit involvement in certain activities, such as usury (riba), gambling (Maisie), and dealing with businesses related to alcohol, pork, and other non-halal activities.