Morgan Stanley Finance LLC Launches $5.4 Million Auto-Callable Securities Backed by Cadence Design Systems Stock

Morgan Stanley Finance LLC Issues Principal-at-Risk Auto-Callable Securities

Morgan Stanley Finance LLC, a Morgan Stanley subsidiary fully guaranteed by the parent, has launched Contingent Income Auto-Callable Securities linked to Cadence Design Systems, Inc. common stock. The total principal amount is $5,419,000, with each unit having a stated principal of $1,000. Pricing occurred on July 23, 2026, with an original issue date of July 28, 2026, and maturity on August 26, 2027. Morgan Stanley & Co. LLC, an affiliate and wholly owned subsidiary of Morgan Stanley, acted as the offering agent.

The price to public per security is $1,000, with the agent earning $15 in commissions and fees per unit, resulting in net proceeds of $985 per security to the issuer. Total commissions and fees amount to $81,285, with net proceeds of $5,337,715. The estimated value on pricing date was $967.60 per security. These securities are part of MSFL's Series A Global Medium-Term Notes program, registered under SEC Registration Nos. 333-293641 and 333-293641-01.

Contingent Coupon and Coupon Barrier Details

The securities feature a contingent coupon of 13.90% annually, payable only if Cadence Design Systems stock closes at or above the coupon barrier level of $181.753 on observation dates. This barrier represents 55% of the initial strike price of $330.46 set on July 23, 2026.

If the underlying closes below $181.753 on any observation date, no coupon will be paid for that interest period. This means investors risk receiving no coupon payments throughout the term if the stock remains below the barrier, exposing them to both loss of income and principal risk.

Automatic Early Redemption and Call Threshold

Automatic early redemption provisions begin on January 25, 2027. On any redemption determination date thereafter—January 25, February 23, March 23, April 23, May 24, June 23, and July 23, 2027—if the underlying closes at or above the call threshold of $330.46 (100% of initial level), the securities will be redeemed early.

Upon early redemption, investors receive the stated principal plus the contingent coupon for the related period. Redemption dates follow shortly after each determination date. Once redeemed, no further payments are made, capping investor returns if the stock price appreciates sufficiently.

Maturity Payment and Principal-at-Risk Structure

If not redeemed early, at maturity on August 26, 2027, payment depends on the final underlying level as of August 23, 2027. If the final level is at or above the downside threshold of $181.753, investors receive full principal plus any payable coupon.

If the final level falls below $181.753, investors receive principal multiplied by the ratio of final to initial level, which could be significantly less than principal or zero. A decline exceeding 45% from the strike price results in losses exceeding coupon income, increasing with further price drops below the threshold.

Initial Level and Strike Date Reference

The initial level of $330.46, set on the strike date July 23, 2026, serves as the baseline for coupon barriers, call thresholds, and performance calculations. Coupon barrier and downside threshold levels are both $181.753 (55% of initial), while the call threshold is $330.46 (100% of initial). These thresholds determine coupon eligibility, early redemption, and maturity payments based on stock price movements relative to the pricing date.

Principal Risk and Credit Exposure

The securities do not guarantee principal repayment or regular interest. Coupon payments depend on underlying stock performance. As unsecured obligations of Morgan Stanley Finance LLC, fully guaranteed by Morgan Stanley, payments rely on Morgan Stanley’s creditworthiness. Default by Morgan Stanley could result in partial or total loss.

Investors have no security interest in the underlying stock and will not benefit from stock appreciation beyond the call threshold. These securities suit investors seeking potentially above-market interest in exchange for significant principal and coupon risks.

Regulatory Registration and Listing Information

Registered with the SEC under Nos. 333-293641 and 333-293641-01, the pricing supplement was filed July 27, 2026, under Rule 424(b)(2). The SEC and state regulators have not approved or disapproved the securities or validated the offering documents. The securities carry CUSIP 61781G3C3 and ISIN US61781G3C36 and will not be listed on any securities exchange, trading only via secondary market channels.

All terms are detailed in the product supplement for Principal at Risk Securities dated April 8, 2026, along with tax supplement and prospectus dated the same day, incorporated by reference.

Distribution, Commissions, and Conflicts of Interest

Morgan Stanley & Co. LLC acts as agent, earning $15 per security sold, with commissions paid to selected dealers and advisors. The agent is an affiliate and wholly owned subsidiary of Morgan Stanley. The offering’s structure involves multiple Morgan Stanley affiliates, creating potential conflicts of interest disclosed in accompanying documentation.

Investors should consider these intercompany relationships when assessing credit quality and distribution conflicts. Additional details on distribution plans and conflicts are available in the product supplement.

Valuation and Pricing Insights

The estimated value at pricing was $967.60 per security, about $32.40 below the $1,000 offering price, reflecting embedded option costs and contingent coupon features. This 3.24% discount indicates the cost of the auto-callable and contingent coupon structure from the issuer’s pricing model perspective.

Valuations are theoretical and depend on stock price, interest rates, volatility, and Morgan Stanley’s credit spread. The pricing supplement does not disclose specific models or assumptions, limiting investor ability to independently verify valuation.