Muslim here

What's the difference when the 'product' is the company itself? When a buyer comes along offering 7-15x the company's earnings for it, why is that not 'the actual value it provides' them?

The reality, and this is how a private party, PE firm, traditional bank or public market will determine this: The company is generating profits currently at this rate Y, and is growing at this rate X, that means that over 3 years it should return those profits + the growth of that profit back to the buyer (in cash as dividends and/or in enterprise value), and that is factored into a rate of return - if that rate is greater than the rates elsewhere, compared to the risk, then it makes sense to buy it at that value. Consider comparing the business to a traditional investment. How much money would you need to have invested in medium-risk markets to return $236k/yr? To beat the market average you'd need about $2M invested to generate those returns. Now factor in that the company itself is growing, and the company will likely generate >$236k next year, and more the following year... so how mu…

> immoral and I don’t want to ever participate in stock market I feel that is a common opinion amongst people that haven't started a business. It is too easy to judge others. If you are selling a product/service you can't avoid becoming part of the capitalist system and you are supporting "immoral" companies through your suppliers (e.g. paying Google for advertising, paying Amazon for fulfilment). It is difficult to start a business and keep true to your ideals. And people that do walk the line between creating a business and keeping their morals is uncommon enough that they tend to be remembered for it e.g. Bob's Red Mill: https://news.ycombinator.com/item?id=39366542 It is much easier to be tritely moralistic if you don't start a business. I often really admire people with idealistic values - and morality is critical in business. I don't admire people if they go to negative extremes: …

As a Muslim, I disagree. A business is more than the sum of its revenues. Marketing, research and development, relationship with clients, etc. are all part of the business valuation. If a buyer looks at some business and decides its worth 10x, then that's not haram as long as you're not deceiving them.

Uh? Islam says nothing about the stock market. Participating in businesses and having shares is completely halal, and encouraged actually. That's the good way of generating long term revenue, as opposed to lending or profiting from interests. The very first Muslims and the prophet himself PBUH were merchants and traders, and business owners.