Morgan Stanley Issues $285M Seagate-Linked Auto-Callable Notes Offering 52% Annual Contingent Coupon

Structure and Principal-at-Risk Investment Details

These securities are structured as principal-at-risk notes, meaning investors are not guaranteed principal repayment at maturity in all scenarios. Instead of traditional interest, they offer a contingent coupon dependent entirely on Seagate Technology's ordinary share performance over the three-year term. No specific revenue or business metrics for Seagate were disclosed; the stock price is the sole reference for payments.

The pricing supplement states these are unsecured obligations of Morgan Stanley Finance LLC, fully and unconditionally guaranteed by Morgan Stanley. This guarantee means investors face credit risk of Morgan Stanley and have no security interest in underlying assets. The notes are issued under Morgan Stanley Finance LLC's Series A Global Medium-Term Notes program, which offers tailored investment products to institutional and sophisticated retail investors.

Contingent Coupon Conditions and Observation Schedule

The 52% annual contingent coupon is payable only if Seagate's stock closing price on observation dates is at or above the coupon barrier level of $472.596 (60% of the initial $787.66 level). If the closing price falls below this barrier on any observation date, no coupon is paid for that period. Observation and coupon payment dates occur throughout the term, with payments adjusted to the next business day if falling on holidays or weekends.

The contingent coupon is conditional and could result in zero payments if Seagate's stock remains below the barrier on all observation dates, underscoring the risk profile of this investment.

Early Redemption Feature and Call Threshold

The notes include an automatic early redemption mechanism triggered if Seagate's stock price reaches or exceeds the call threshold of $787.66 (100% of initial level) on redemption determination dates. The first such date is October 19, 2026. No early redemption can occur before this date.

If triggered, Morgan Stanley redeems the notes at $1,000 principal plus the applicable contingent coupon on the corresponding early redemption date. Redemption determination dates occur roughly quarterly through April 17, 2029. After early redemption, investors cease to participate in any further stock appreciation.

Risk of Principal Loss and Maturity Payment Terms

If the notes are not redeemed early, maturity payment depends on Seagate's stock price relative to the downside threshold of $472.596 (60% of initial level) on July 17, 2029. If the final closing price is at or above this threshold, investors receive the $1,000 principal plus any final contingent coupon.

If the final price is below $472.596, investors suffer a proportional principal loss calculated as (final price / initial price) × $1,000, potentially resulting in a total loss if Seagate's stock declines 60% or more from the initial $787.66 level.

Issuance and Pricing Details

Morgan Stanley Finance LLC issued 285,000 notes at $1,000 each, totaling $285 million principal. The securities were priced on July 17, 2026, issued on July 22, 2026, and mature on July 20, 2029. Agent commissions and fees totaled $20 per note, resulting in net proceeds of $980 per note or $279.3 million aggregate.

The estimated value at pricing was $954.50 per note, reflecting embedded risks such as conditional coupons and downside exposure. Morgan Stanley & Co. LLC acted as distribution agent, with selected dealers and advisors receiving the $20 sales commission.

Reference Asset and Initial Level Determination

The notes' performance is tied to Seagate Technology Public Limited Company's ordinary shares, with the strike and pricing date on July 17, 2026. The initial level was set at $787.66, which serves as the 100% baseline for calculating coupon barriers, call thresholds, and performance factors.

Key price levels include a coupon barrier and downside threshold at $472.596 (60% of initial) and a call threshold at $787.66 (100% of initial), creating a multi-tiered payoff structure dependent on Seagate's stock price movements.

Investor Risk and Guarantee Information

The pricing supplement highlights that these securities suit investors willing to accept substantial risks for above-market coupon potential. Investors may lose their entire principal and will not benefit from stock appreciation beyond the call threshold. Early redemption limits upside participation.

Although Morgan Stanley fully guarantees Morgan Stanley Finance LLC's obligations, this guarantee depends on Morgan Stanley's creditworthiness and does not eliminate default risk. The notes are unsecured, not backed by collateral, and are not FDIC insured. All payments depend on the credit risk of Morgan Stanley and its finance subsidiary.

Registration and Distribution Details

These securities are registered under numbers 333-293641 and 333-293641-01, with CUSIP 61781G7K1 and ISIN US61781G7K16. The pricing supplement dated July 17, 2026, was filed under Rule 424(b)(2). The offering included a product supplement for principal-at-risk securities, a tax supplement, and a prospectus all dated April 8, 2026.

The notes will not be listed on any exchange and will trade over-the-counter or via private negotiation if secondary trading occurs. Morgan Stanley & Co. LLC, an affiliate of Morgan Stanley Finance LLC, served as distribution agent, disclosing potential conflicts of interest as required.

Observation and Redemption Date Timeline

Redemption determination and observation dates span from October 2026 through April 2029, with the final observation on July 17, 2029, and maturity on July 20, 2029. Redemption dates occur approximately quarterly, including October 19, 2026; January 19, 2027; April 19, 2027; July 19, 2027; October 18, 2027; January 18, 2028; April 17, 2028; July 17, 2028; October 17, 2028; January 17, 2029; and April 17, 2029. Dates may be postponed due to non-trading days or market disruptions.

Corresponding early redemption payment dates follow shortly after each determination date, such as October 22, 2026; January 22, 2027; April 22, 2027; July 22, 2027; October 21, 2027; January 21, 2028; April 20, 2028; July 20, 2028; October 20, 2028; January 22, 2029; and April 20, 2029. The final coupon payment, if applicable, will be made on maturity date July 20, 2029.

Market Context and Investor Guidance

Morgan Stanley designed these securities to attract investors seeking higher yields amid complex market conditions. The 52% contingent coupon compensates for significant downside risk and is conditional on Seagate's stock maintaining minimum price levels. The early redemption feature limits issuer risk but caps investor upside above the $787.66 call threshold.

Prospective investors should evaluate Seagate Technology's fundamentals, industry position, and stock volatility to gauge payment likelihoods. They must assess whether the high coupon justifies the risk of principal loss, especially given the possibility of no coupon payments if Seagate's shares trade below the $472.596 barrier. The three-year term and limited secondary market liquidity also require consideration before investing.