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Morgan Stanley Finance LLC has priced and issued structured investment securities tied to NVIDIA Corporation's common stock performance, totaling $16,672,000 in aggregate principal. These securities mature on January 21, 2028, and offer an annual contingent income rate of 11.92%. However, they include significant principal-at-risk features that could lead to considerable losses if NVIDIA's stock price declines sharply. This issuance highlights Morgan Stanley's ongoing engagement in the structured products market, where investors trade downside equity risk for the potential of above-market income returns.
Key Points
- NYSE Ticker: MS-PQ
- Morgan Stanley Finance LLC issued $16,672,000 in Contingent Income Memory Auto-Callable Securities linked to NVIDIA stock, priced on July 16, 2026, with maturity on January 21, 2028
- Securities provide an 11.92% annual contingent coupon, payable only if NVIDIA's stock closes at or above $114.07 (55% of the initial price) on observation dates
- Principal is at risk: investors lose 1% for each 1% decline in NVIDIA's stock price below the downside threshold, with potential total loss; automatic early redemption occurs if stock hits $207.40 or higher on specified redemption dates
Income Structure and Features of NVIDIA-Linked Securities
These securities combine equity exposure with structured income elements. The 11.92% annual contingent coupon is payable only when NVIDIA's stock closes at or above $114.07 on observation dates—representing 55% of the initial stock price of $207.40 as of July 16, 2026. If the stock declines moderately, no coupon is paid for that period, though unpaid coupons may accumulate and be paid later if the stock recovers to or above the barrier.
The coupon payment includes a "memory" feature, allowing investors to receive previously unpaid contingent coupons on subsequent payment dates if the barrier condition is met later. However, if the stock remains below the coupon barrier on all observation dates through maturity, unpaid coupons will not be paid. Coupon payment dates correspond with observation dates: October 16, 2026; January 19, 2027; April 16, 2027; July 16, 2027; October 18, 2027; and January 18, 2028, subject to postponement for non-trading days or market disruptions.
Automatic Early Redemption and Exit Conditions
The securities feature automatic early redemption if NVIDIA's stock reaches or exceeds $207.40 (100% of the initial price) on any of five redemption determination dates: October 16, 2026; January 19, 2027; April 16, 2027; July 16, 2027; and October 18, 2027. Upon such occurrence, the securities will be redeemed early on the corresponding redemption date.
Investors receive $1,000 principal per security plus the contingent coupon for the related period and any previously unpaid coupons upon early redemption. No further payments are made after redemption. Early redemption cannot occur before the first redemption determination date of October 16, 2026, regardless of NVIDIA's stock performance in the initial months after issuance.
Principal-at-Risk and Downside Exposure
These securities carry significant downside risk, differentiating them from traditional debt instruments. While the exact downside threshold is not fully detailed in the pricing supplement, if NVIDIA's stock closes below this level on January 18, 2028, investors incur losses proportional to the decline. Specifically, investors lose 1% of their investment for every 1% drop in NVIDIA's stock price during the term.
In extreme downside scenarios, repayment at maturity could be substantially less than the principal or even zero, meaning investors could lose their entire $1,000 principal per security. Investors must be willing to accept the risk of total loss and will not benefit from any stock price appreciation beyond the automatic redemption threshold, as upside returns are capped.
Pricing and Issuance Details
The securities were sold to the public at $1,000 each, totaling $16,672,000. Morgan Stanley & Co. LLC, acting as agent and affiliate of the issuer, charged $250,080 in commissions and fees ($15 per security). Net proceeds to Morgan Stanley Finance LLC were $16,421,920 after these deductions.
The securities’ estimated value on the July 16, 2026 pricing date was $979.20 per security, reflecting a discount due to embedded equity option features and credit risk of Morgan Stanley Finance LLC’s unsecured obligations. Selected dealers and financial advisors received the $15 per-security sales commission. Further distribution and conflict of interest details appear in the product supplement.
Credit Risk and Guarantee Information
These securities are unsecured obligations of Morgan Stanley Finance LLC, fully and unconditionally guaranteed by Morgan Stanley. Payments are subject to credit risk of both entities. Investors could lose all or part of their investment if either defaults. The securities are not secured by any collateral or reference assets.
They are not bank deposits, are uninsured by the FDIC or any other government agency, and do not represent bank obligations. Investors are unsecured creditors of Morgan Stanley Finance LLC with recourse only to Morgan Stanley’s guarantee. The disclosure advises investors to assess Morgan Stanley’s creditworthiness carefully before investing.
Investment Suitability and Risks
The securities are suitable only for investors seeking potentially above-market interest in exchange for significant risk of principal loss and possible absence of coupon payments throughout the term. The 11.92% contingent coupon compensates for substantial equity and credit risks. The issuer highlights that these securities involve risks beyond those of ordinary debt and directs investors to the "Risk Factors" section starting on page 8 of the accompanying documents for comprehensive disclosures.
Investors will not participate in NVIDIA’s stock appreciation beyond the automatic redemption level, resulting in asymmetric payoffs with full downside exposure and capped upside. Prospective purchasers must be prepared to lose their entire initial investment.
Registration and Legal Filings
The pricing supplement was filed on July 20, 2026 under Rule 424(b)(2) of the Securities Act of 1933. The securities are issued under Registration Statement Nos. 333-293641 and 333-293641-01. The supplement is dated July 16, 2026, coinciding with the pricing date. Investors should review this supplement alongside the product supplement for Principal at Risk Securities (April 8, 2026), tax supplement (April 8, 2026), and prospectus (April 8, 2026) for full details on terms, taxation, and disclosures.
The SEC and state regulators have neither approved nor disapproved the securities nor confirmed the truthfulness or completeness of the documents. Any contrary claim is a criminal offense. Morgan Stanley & Co. LLC acts as agent, with supplemental information on distribution and conflicts of interest, including Morgan Stanley’s affiliation with the issuer.
Observation Dates and Payment Schedule
Observation dates for measuring NVIDIA’s stock price to determine coupon eligibility and early redemption triggers are October 16, 2026; January 19, 2027; April 16, 2027; July 16, 2027; October 18, 2027; and January 18, 2028. These dates may be postponed for non-trading days or market disruptions. Coupon payments generally follow these observation dates, with the final payment on maturity, January 21, 2028.
The quarterly observation schedule offers multiple opportunities for early redemption if NVIDIA’s stock remains at or above $207.40, providing regular redemption decision points but also multiple risk assessment moments. The final observation date determines both the last coupon eligibility and the downside threshold for maturity payment.
Use of Proceeds and Hedging Strategies
Details on use of proceeds and hedging appear in the product supplement’s "Use of Proceeds and Hedging" section. Morgan Stanley Finance LLC received $16,421,920 net proceeds after agent commissions. Specific deployment of proceeds or hedging strategies are not detailed in the pricing supplement.
It is expected that Morgan Stanley will use part of the proceeds to purchase NVIDIA stock or derivatives to hedge exposure related to automatic redemption and contingent coupons. Hedging costs are generally reflected in the difference between the $1,000 issue price and the $979.20 estimated value. Full hedging details require consulting the referenced product supplement.
