MS Structured Notes: High Coupon, 80% Barrier, Apple-Linked Auto-Call 2027
Rhea-AI Filing Summary
Morgan Stanley Finance LLC, fully guaranteed by Morgan Stanley, is marketing Market-Linked, Auto-Callable Contingent Coupon Securities tied to Apple Inc. common stock (CUSIP 61778NJD4). Each $1,000 security may pay a quarterly coupon of >=10.85% p.a., but only when Apple’s closing price on the relevant calculation day is at least 80% of the initial price (the coupon threshold).
Beginning January 2026, the notes are automatically called at face value plus the current coupon if Apple closes at or above the starting price on any quarterly calculation day. If not called, principal is protected only down to the same 80% downside threshold; below that level investors are fully exposed to Apple’s negative return at maturity (January 26 2027). Investors do not participate in any upside on the stock beyond coupon payments.
The estimated value on the pricing date will be about $965.80 per $1,000 note, reflecting issuance, structuring and hedging costs. The securities will not be listed, may trade at a discount, and all payments are subject to Morgan Stanley’s credit risk. Dealers may earn up to $20.75 per note in commissions, with additional concessions of up to $15.00.
Key risks include loss of more than 20% (and potentially all) of principal, limited secondary liquidity, dependence on single-day observations for coupons, and tax uncertainty. The notes are complex, principal-at-risk products intended only for investors who understand the structure and underlying risks.
Positive
- Attractive coupon rate: contingent coupon set at a minimum 10.85% per annum, well above typical investment-grade yields.
- Quarterly autocall feature allows early redemption at par plus coupon if Apple performs, potentially shortening duration and boosting annualized return.
- Defined 20% downside buffer offers limited protection against moderate declines in Apple’s share price.
- Full guarantee by Morgan Stanley reduces counterparty risk compared with an unrated issuer.
Negative
- Principal at risk below 80% barrier: investors absorb Apple’s full negative performance once the threshold is breached.
- No upside participation: returns are capped at coupon payments; investors miss any stock appreciation.
- Single-observation risk: coupons and principal protection rely on discrete quarterly or final prices, heightening path dependency.
- Estimated value 3.4% below face implies an immediate economic cost and potential secondary market discount.
- Credit exposure to Morgan Stanley: payments depend on the bank’s ability to meet obligations.
- Limited liquidity—the securities are unlisted, and secondary trading is dealer-dependent.
Insights
TL;DR: High coupon, callable, 80% barrier; investors bear Apple downside and Morgan Stanley credit risk.
The term sheet offers a competitive contingent coupon (>10.85% p.a.) and quarterly autocall starting at six months, features that may appeal in a low-volatility environment. However, investors shoulder full downside below an 80% barrier on a single final observation, giving the note an equity-like risk profile without upside participation. The estimated value (≈96.6% of face) highlights an issuer spread of roughly 3.4%, standard for retail structured notes but an immediate economic drag. Lack of exchange listing and dealer-determined secondary markets further diminishes liquidity.
For Morgan Stanley, issuance adds fee income with limited incremental risk thanks to hedging. For note buyers, the product suits tactical income strategies only if they view an 20% buffer as adequate and are comfortable with single-name concentration in Apple plus MS credit exposure.
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Morgan Stanley Finance LLC Structured Investments |
Free Writing Prospectus to Preliminary Pricing Supplement No. 9,238 Filed pursuant to Rule 433 Registration Statement Nos. 333-275587; 333-275587-01 July 9, 2025 |
Market Linked Securities—Auto-Callable with Contingent Coupon and Contingent Downside
Principal at Risk Securities Linked to the Common Stock of Apple Inc. due January 26, 2027
Fully and Unconditionally Guaranteed by Morgan Stanley
Summary of terms
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Issuer and guarantor |
Morgan Stanley Finance LLC (issuer) and Morgan Stanley (guarantor) |
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Underlying stock |
Apple Inc. common stock |
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Pricing date* |
July 21, 2025 |
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Original issue date* |
July 24, 2025 |
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Face amount |
$1,000 per security |
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Contingent coupon payments |
On each contingent coupon payment date, you will receive a contingent coupon payment at a per annum rate equal to the contingent coupon rate if, and only if, the stock closing price on the related calculation day is greater than or equal to the coupon threshold price. Each “contingent coupon payment”, if any, will be calculated per security as follows: ($1,000 × contingent coupon rate) / 4. |
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Contingent coupon rate |
At least 10.85% per annum, to be determined on the pricing date |
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Automatic call |
If, on any calculation day (other than the final calculation day), beginning in January 2026, the stock closing price is greater than or equal to the starting price, the securities will be automatically called for a cash payment per security equal to the face amount plus a final contingent coupon payment on the related call settlement date. |
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Calculation days |
Quarterly, on the 21st of each January, April, July and October, commencing in October 2025 and ending on the final calculation day. We also refer to the January 2027 calculation day as the final calculation day. |
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Contingent coupon payment dates |
Three business days after the applicable calculation day; provided that the coupon payment date for the final calculation day is the maturity date. |
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Call settlement date |
Three business days after the applicable calculation day. |
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Maturity payment amount (per security) |
●if the ending price is greater than or equal to the downside threshold price: $1,000; or ●if the ending price is less than the downside threshold price: $1,000 × performance factor |
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Maturity date* |
January 26, 2027 |
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Starting price |
The stock closing price on the pricing date |
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Ending price |
The stock closing price on the final calculation day |
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Performance factor |
The ending price divided by the starting price. |
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Coupon threshold price |
80% of the starting price |
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Downside threshold price |
80% of the starting price |
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Calculation agent |
Morgan Stanley & Co. LLC, an affiliate of the issuer |
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Denominations |
$1,000 and any integral multiple of $1,000 |
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Agent discount** |
Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC will act as the agents for this offering. Wells Fargo Securities, LLC will receive a commission of up to $20.75 for each security it sells. Dealers, including Wells Fargo Advisors (“WFA”), may receive a selling concession of up to $15.00 per security, and WFA may receive a distribution expense fee of $0.75 for each security sold by WFA. |
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CUSIP |
61778NJD4 |
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Tax considerations |
See preliminary pricing supplement |
*Subject to change
** In addition, selected dealers may receive a fee of up to 0.20% for marketing and other services
Hypothetical payout profile (excluding contingent coupon payments)
If the securities are not automatically called prior to the maturity date and the ending price is less than the downside threshold price, you will lose more than 20%, and possibly all, of the face amount of your securities at the maturity date.
Any return on the securities will be limited to the sum of your contingent coupon payments, if any. You will not participate in any appreciation of the underlying stock, but you will have full downside exposure to the underlying stock on the final calculation day if the ending price is less than the downside threshold price.
The face amount of each security is $1,000. This price includes costs associated with issuing, selling, structuring and hedging the securities, which are borne by you, and, consequently, the estimated value of the securities on the pricing date will be less than $1,000 per security. We estimate that the value of each security on the pricing date will be approximately $965.80, or within $35.00 of that estimate. Our estimate of the value of the securities as determined on the pricing date will be set forth in the final pricing supplement. See “Investment Summary” and “Risk Factors” in the accompanying preliminary pricing supplement for further information.
This document provides a summary of the terms of the securities. Investors should carefully review the accompanying preliminary pricing supplement, product supplement for principal at risk securities and prospectus before making a decision to invest in the securities.
Preliminary Pricing Supplement:
https://www.sec.gov/Archives/edgar/data/895421/000183988225037877/ms9238_424b2-20565.htm
The securities have complex features and investing in the securities involves risks not associated with an investment in ordinary debt securities. See “Risk Factors” in the accompanying preliminary pricing supplement. All payments on the securities are subject to our credit risk.
This introductory term sheet does not provide all of the information that an investor should consider prior to making an investment decision.
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.
Selected risk considerations
The risks set forth below are discussed in more detail in the “Risk Factors” section in the accompanying preliminary pricing supplement, product supplement for principal at risk securities and prospectus. Please review those risk factors carefully.
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Risks Relating to an Investment in the Securities ●The securities do not guarantee the return of the face amount of your securities at maturity. ●The securities do not provide for the regular payment of interest. ●The contingent coupon payment, if any, is based on the stock closing price of the underlying stock on only the related quarterly calculation day at the end of the related interest period. ●Investors will not participate in any appreciation in the price of the underlying stock. ●The market price will be influenced by many unpredictable factors. ●The securities are subject to our credit risk, and any actual or anticipated changes to our credit ratings or credit spreads may adversely affect the market value of the securities. ●As a finance subsidiary, MSFL has no independent operations and will have no independent assets. ●Investing in the securities is not equivalent to investing in the underlying stock. ●Reinvestment risk. ●The rate we are willing to pay for securities of this type, maturity and issuance size is likely to be lower than the rate implied by our secondary market credit spreads and advantageous to us. Both the lower rate and the inclusion of costs associated with issuing, selling, structuring and hedging the securities in the face amount reduce the economic terms of the securities, cause the estimated value of the securities to be less than the face amount and will adversely affect secondary market prices. ●The estimated value of the securities is determined by reference to our pricing and valuation models, which may differ from those of other dealers and is not a maximum or minimum secondary market price. ●The securities will not be listed on any securities exchange and secondary trading may be limited. ●The calculation agent, which is a subsidiary of Morgan Stanley and an affiliate of MSFL, will make determinations with respect to the securities. ●Hedging and trading activity by our affiliates could potentially adversely affect the value of the securities. ●The maturity date may be postponed if the final calculation day is postponed. ●Potentially inconsistent research, opinions or recommendations by Morgan Stanley, MSFL, WFS or our or their respective affiliates. ●The U.S. federal income tax consequences of an investment in the securities are uncertain. |
Risks Relating to the Underlying Stock ●No affiliation with Apple Inc. ●We may engage in business with or involving Apple Inc. without regard to your interests. ●The antidilution adjustments the calculation agent is required to make do not cover every corporate event that could affect the underlying stock. ●Historical closing prices of the underlying stock should not be taken as an indication of the future performance of the underlying stock during the term of the securities. |
For more information about the underlying stock, including historical performance information, see the accompanying preliminary pricing supplement.
Morgan Stanley and MSFL have filed a registration statement (including a prospectus, as supplemented by the applicable product supplement) with the Securities and Exchange Commission, or SEC, for the offering to which this communication relates. You should read the prospectus in that registration statement, the applicable product supplement and any other documents relating to this offering that Morgan Stanley and MSFL have filed with the SEC for more complete information about Morgan Stanley, MSFL and this offering. You may get these documents without cost by visiting EDGAR on the SEC web site at.www.sec.gov. Alternatively, Morgan Stanley, MSFL, any underwriter or any dealer participating in the offering will arrange to send you the applicable product supplement and prospectus if you so request by calling toll-free 1-(800)-584-6837.
Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo Finance LLC and Wells Fargo & Company.
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