Callable Contingent Income Securities due May 27, 2027
All Payments on the Securities Based on the Worst Performing of the Common Stock of Amazon.com, Inc., the Common Stock of Costco Wholesale Corporation, the Common Stock of Walmart Inc. and the Common Stock of Target Corporation
Fully and Unconditionally Guaranteed by Morgan Stanley
Principal at Risk Securities
The securities offered are unsecured obligations of Morgan Stanley Finance LLC (“MSFL”) and are fully and unconditionally guaranteed by Morgan Stanley. The securities have the terms described in the accompanying prospectus supplement and prospectus, as supplemented or modified by this document. The securities do not guarantee the repayment of principal and do not provide for the regular payment of interest. Instead, the securities will pay a contingent monthly coupon but only if the determination closing price of each of the common stock of Amazon.com, Inc., the common stock of Costco Wholesale Corporation, the common stock of Walmart Inc. and the common stock of Target Corporation, which we refer to collectively as the underlying stocks, is greater than or equal to 60% of the respective initial share price, which we refer to as the respective coupon threshold level, on the related observation date. If, however, the determination closing price of any underlying stock is less than the respective coupon threshold level on any observation date, we will pay no interest for the related monthly period. In addition, beginning on August 29, 2024, we will redeem the securities on any quarterly redemption date for a redemption payment equal to the sum of the stated principal amount plus any contingent monthly coupon otherwise due with respect to the related observation date, if and only if the output of a risk neutral valuation model on a business day, as selected by the calculation agent, that is no earlier than three business days before the observation date preceding such redemption date and no later than such observation date, based on the inputs indicated under “Call feature” below, indicates that redeeming on such date is economically rational for us as compared to not redeeming on such date. An early redemption of the securities will not automatically occur based on the performance of the underlying stocks. At maturity, if the securities have not previously been redeemed and the final share price of each underlying stock is greater than or equal to 60% of the respective initial share price, which we refer to as the respective downside threshold level, the payment at maturity will be the stated principal amount and the related contingent monthly coupon. However, if the final share price of any underlying stock is less than the respective downside threshold level, investors will be exposed to the decline in the worst performing underlying stock on a 1-to-1 basis and will receive a payment at maturity that is less than 60% of the stated principal amount of the securities and could be zero. Accordingly, investors in the securities must be willing to accept the risk of losing their entire initial investment and also the risk of not receiving any contingent monthly coupons throughout the 3-year term of the securities. The securities are for investors who are willing to risk their principal and seek an opportunity to earn interest at a potentially above-market rate in exchange for the risk of receiving no monthly coupons over the entire 3-year term and in exchange for the possibility of an early redemption of the securities based on the output of a risk neutral valuation model. Because the payment of contingent monthly coupons is based on the worst performing of the underlying stocks, the fact that the securities are linked to four underlying stocks does not provide any asset diversification benefits and instead means that a decline of any underlying stock below the relevant coupon threshold level will result in no contingent monthly coupons, even if the other underlying stocks close at or above the respective coupon threshold levels. Because all payments on the securities are based on the worst performing of the underlying stocks, a decline beyond the respective coupon threshold level or downside threshold level, as applicable, of any underlying stock will result in no contingent monthly coupon payments and/or a significant loss of your investment, as applicable, even if the other underlying stocks have appreciated or have not declined as much. Investors will not participate in any appreciation of any underlying stock. The securities are notes issued as part of MSFL’s Series A Global Medium-Term Notes program.
All payments are subject to our credit risk. If we default on our obligations, you could lose some or all of your investment. These securities are not secured obligations and you will not have any security interest in, or otherwise have any access to, any underlying reference asset or assets.
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SUMMARY TERMS
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Issuer:
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Morgan Stanley Finance LLC
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Guarantor:
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Morgan Stanley
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Underlying stocks:
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Amazon.com, Inc. common stock (the “AMZN Stock”), Costco Wholesale Corporation common stock (the “COST Stock”), Walmart Inc. common stock (the “WMT Stock”) and Target Corporation common stock (the “TGT Stock”)
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Aggregate principal amount:
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$
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Stated principal amount:
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$1,000 per security
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Issue price:
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$1,000 per security (see “Commissions and issue price” below)
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Pricing date:
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May 24, 2024
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Original issue date:
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May 30, 2024 (3 business days after the pricing date)
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Maturity date:
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May 27, 2027
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Call feature:
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Beginning on August 29, 2024, an early redemption, in whole but not in part, will occur on a redemption date if and only if the output of a risk neutral valuation model on a business day, as selected by the calculation agent, that is no earlier than three business days before the observation date preceding such redemption date and no later than such observation date (the “determination date”), taking as input: (i) prevailing reference market levels, volatilities and correlations, as applicable and in each case as of the determination date and (ii) Morgan Stanley’s credit spreads as of the pricing date, indicates that redeeming on such date is economically rational for us as compared to not redeeming on such date. If we call the securities, we will give you notice no later than the observation date preceding the redemption date specified in the notice. No further payments will be made on the securities once they have been redeemed.
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Redemption payment:
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The redemption payment will be an amount equal to (i) the stated principal amount for each security you hold plus (ii) any contingent monthly coupon otherwise due with respect to the related observation date.
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Determination closing price:
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With respect to each underlying stock, the closing price of such underlying stock on any observation date (other than the final observation date), multiplied by the adjustment factor on such observation date
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Redemption dates:
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Quarterly, on August 29, 2024, November 29, 2024, February 27, 2025, May 30, 2025, August 28, 2025, November 28, 2025, February 27, 2026, May 29, 2026, August 27, 2026, November 30, 2026 and March 1, 2027. If any such day is not a business day, the redemption payment will be made on the next succeeding business day and no adjustment will be made to any redemption payment made on that succeeding business day
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Contingent monthly coupon:
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A contingent monthly coupon at an annual rate of at least 14.85% (corresponding to at least approximately $12.375 per month per security, to be determined on the pricing date) will be paid on the securities on each coupon payment date but only if the determination closing price of each underlying stock is greater than or equal to the respective coupon threshold level on the related observation date.
If, on any observation date, the determination closing price of any underlying stock is less than the respective coupon threshold level, no contingent monthly coupon will be paid with respect to that observation date. It is possible that one or more underlying stocks will remain below the respective coupon threshold level(s) for extended periods of time or even throughout the entire 3-year term of the securities so that you will receive few or no contingent monthly coupons.
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Payment at maturity:
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If the securities are not redeemed prior to maturity, investors will receive a payment at maturity determined as follows:
●If the final share price of each underlying stock is greater than or equal to the respective downside threshold level: the stated principal amount and the contingent monthly coupon with respect to the final observation date
●If the final share price of any underlying stock is less than the respective downside threshold level: (i) the stated principal amount multiplied by (ii) the share performance factor of the worst performing underlying stock
Under these circumstances, the payment at maturity will be significantly less than the stated principal amount of $1,000, and will represent a loss of more than 40%, and possibly all, of your investment.
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Terms continued on the following page
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Agent:
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Morgan Stanley & Co. LLC (“MS & Co.”), an affiliate of MSFL and a wholly owned subsidiary of Morgan Stanley. See “Supplemental information regarding plan of distribution; conflicts of interest.”
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Estimated value on the pricing date:
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Approximately $984.50 per security, or within $30.00 of that estimate. See “Investment Summary” beginning on page 3.
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Commissions and issue price:
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Price to public(1)
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Agent’s commissions and fees(2)
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Proceeds to us(3)
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Per security
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$1,000
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$
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$
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Total
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$
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$
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$
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(1)The securities will be sold only to investors purchasing the securities in fee-based advisory accounts.
(2)MS & Co. expects to sell all of the securities that it purchases from us to an unaffiliated dealer at a price of $ per security, for further sale to certain fee-based advisory accounts at the price to public of $1,000 per security. MS & Co. will not receive a sales commission with respect to the securities. See “Supplemental information regarding plan of distribution; conflicts of interest.” For additional information, see “Plan of Distribution (Conflicts of Interest)” in the accompanying prospectus supplement.
(3)See “Use of proceeds and hedging” on page 37.
The securities involve risks not associated with an investment in ordinary debt securities. See “Risk Factors” beginning on page 11.
The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this document or the accompanying prospectus supplement and prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The securities are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency or instrumentality, nor are they obligations of, or guaranteed by, a bank.
You should read this document together with the related prospectus supplement and prospectus, each of which can be accessed via the hyperlinks below. When you read the accompanying prospectus supplement, please note that all references in such supplement to the prospectus dated November 16, 2023, or to any sections therein, should refer instead to the accompanying prospectus dated April 12, 2024 or to the corresponding sections of such prospectus, as applicable. Please also see “Additional Terms of the Securities” and “Additional Information About the Securities” at the end of this document.
As used in this document, “we,” “us” and “our” refer to Morgan Stanley or MSFL, or Morgan Stanley and MSFL collectively, as the context requires.
Prospectus Supplement dated November 16, 2023 Prospectus dated April 12, 2024