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Morgan Stanley Finance LLC has submitted a preliminary pricing supplement for a new structured investment offering: Jump Notes featuring an auto-callable option maturing on August 10, 2029. These notes, issued by Morgan Stanley Finance LLC and fully guaranteed by Morgan Stanley, are tied to the performance of the worst-performing stock among Amazon.com Inc., Broadcom Inc., and Meta Platforms Inc. Investors bear principal risk if any of the three stocks decline, with potential early redemption or maturity payments exceeding principal only if all three stocks appreciate.
Key Highlights
- NYSE ticker: MS-PQ
- Morgan Stanley Finance LLC launched Jump Notes with auto-callable features linked to Amazon, Broadcom, and Meta technology stocks
- Each note has a stated principal of $1,000, issued at $1,000, with an estimated value on pricing date near $972.20 per note, within $45.00 of this estimate
- Automatic early redemption payment of $1,200 per note triggered on August 12, 2027, if all three stocks close at or above initial levels on August 9, 2027
- 120% participation rate applies, providing investors 120% of any upside based on the worst-performing stock among the three
Structured Notes Designed Around Three Leading Tech Stocks
This complex structured product links returns to Amazon.com Inc., Broadcom Inc., and Meta Platforms Inc. common stocks. Issued under Morgan Stanley Finance LLC’s Series A Global Medium-Term Notes program and fully guaranteed by Morgan Stanley, the notes track the worst-performing stock among the three. The notes do not pay interest or coupons; investors receive principal at maturity unless specific performance conditions are met. The initial reference levels for each stock are their closing prices on August 7, 2026, serving as the baseline for performance measurement. The payout depends on the worst-performing stock, meaning strong gains in two stocks do not offset declines in the third.
Auto-Callable Feature Offers Conditional Early Redemption with Premium
The notes include an auto-callable mechanism allowing early redemption if all three stocks close at or above their initial levels on the first determination date, August 9, 2027. If triggered, investors receive $1,200 per note on August 12, 2027, a 20% premium over principal. No further payments are made after early redemption. This feature requires simultaneous strength across all three stocks, not just one or two.
Maturity Payments Provide Principal Protection with Limited Upside
If not redeemed early, the notes mature on August 10, 2029, with payments based on stock performance measured on August 7, 2029. Investors receive $1,000 principal plus an upside payment only if all three stocks exceed their initial levels. The upside is calculated at 120% participation of the worst-performing stock’s return. If any stock is at or below its initial level, investors receive only principal, ensuring downside principal protection at maturity.
Principal Risk Focused on Worst-Performing Stock Limits Diversification
The notes’ structure emphasizes downside risk linked to the worst-performing stock, offering no diversification benefits despite three underlying stocks. Poor performance by any single stock adversely affects returns, even if the other two perform well. Investors accept principal risk and forgo current income for potential early redemption or maturity payments exceeding principal. All payments are subject to Morgan Stanley’s credit risk, with potential loss if the guarantor defaults.
Pricing Reflects Issuer’s Internal Assumptions and Funding Costs
The original issue price is $1,000 per note, with an estimated value at pricing of approximately $972.20, reflecting issuance, sales, structuring, and hedging costs borne by investors. Morgan Stanley’s valuation models incorporate a debt component and performance linked to the three stocks, using internal assumptions on volatility and interest rates. The internal funding rate applied likely favors Morgan Stanley compared to secondary market credit spreads, indicating economic terms more advantageous to the issuer than to investors.
Distribution Limited to Fee-Based Advisory Accounts
Morgan Stanley & Co. LLC, an affiliate and wholly owned subsidiary of Morgan Stanley, acts as agent for the notes. Sales are restricted to fee-based advisory accounts, potentially limiting the market. Morgan Stanley & Co. plans to sell all notes purchased from Morgan Stanley Finance LLC to an unaffiliated dealer, who will distribute them to fee-based advisory clients at the public price of $1,000 per note. No sales commissions are paid to Morgan Stanley & Co., and details on dealer compensation are not disclosed.
Registration Details and Securities Status Affect Liquidity and Investor Rights
The preliminary pricing supplement is filed under Rule 424(b)(2) of the Securities Act of 1933, referencing Registration Statement Nos. 333-293641 and 333-293641-01. The notes carry CUSIP 61781DBV9 and ISIN US61781DBV91. They will not be listed on any exchange, limiting liquidity and secondary market trading. The notes are unsecured obligations of Morgan Stanley Finance LLC with no security interest in the underlying stocks. They are not deposits, savings accounts, or insured by the FDIC or any government agency, despite Morgan Stanley’s full guarantee.
Key Dates Define Payment and Valuation Schedule
The strike and pricing dates are August 7, 2026, establishing baseline stock levels. The original issue date is August 12, 2026. The first auto-call determination date is August 9, 2027, with early redemption on August 12, 2027, if conditions are met. The final determination date is August 7, 2029, subject to postponement for market disruptions, with maturity on August 10, 2029. Valuation methodologies and definitions are detailed in the accompanying product supplement.
Multiple Risk Factors Include Concentrated Downside and Credit Exposure
The notes’ worst-performing stock methodology concentrates downside risk, meaning a decline in any one stock negates upside participation. Correlated declines in technology stocks during market downturns may reduce diversification benefits. All payments depend on Morgan Stanley’s creditworthiness; investors risk loss if Morgan Stanley defaults. The full guarantee substitutes Morgan Stanley’s credit risk for that of the issuer but does not eliminate credit risk. Notes are unsecured obligations, ranking as general creditors without priority or collateral access in bankruptcy.
