Morgan Stanley FWP: 2025 Auto-Callable Worst-Of Note with 35% Buffer
Rhea-AI Filing Summary
Morgan Stanley Finance LLC is offering Market-Linked Securities that are Auto-Callable with 200% leveraged upside and contingent downside principal at risk. The notes are linked to the lowest performing of two underlying stocks – Alphabet Inc. Class A (GOOGL) and Target Corp. (TGT) – and are fully and unconditionally guaranteed by Morgan Stanley.
- Face amount: $1,000 per security; denominations of $1,000 and integral multiples.
- Pricing date: July 18 2025 | Issue date: July 23 2025.
- Automatic call: If, on the July 23 2026 call date, the worst-performing stock closes at or above its starting price, the security is redeemed early for at least $1,495 (≈ 49.50% premium).
- Maturity: July 21 2028 (3-year final term if not called).
- Payout at maturity (if not called):
- Upside: $1,000 + (Stock Return × 200%).
- Sideways (≥ 65% and < 100% of start): return of principal.
- Downside (< 65% of start): principal loss equal to the full negative return of the worst stock.
- Threshold price: 65% of starting price (35% buffer).
- Estimated value: ≈ $938.90 (4–5% below face), reflecting issuance and hedging costs.
- Distribution fees: Wells Fargo Securities may receive up to $25.75 per note; other dealers up to $20.00; WFA distribution expense fee $0.75.
- CUSIP: 61778NJB8.
Key risks highlighted include: no periodic interest; principal at risk; exposure to worst-of two equities; limited secondary liquidity; issuer & guarantor credit risk; potential conflicts from affiliate hedging and calculation-agent roles; uncertain U.S. tax treatment.
Investors should review the preliminary pricing supplement, product supplement for principal-at-risk securities, and prospectus available on the SEC website before investing.
Positive
- High potential call premium: at least 49.5% payable after only one year if performance condition met.
- 200% participation rate on any positive return of the worst-performing stock at maturity provides leveraged upside.
- 35% downside buffer (threshold at 65% of start) before principal loss occurs if not called.
Negative
- Principal at risk: investors suffer full downside of the worst stock below the 35% buffer and could lose entire investment.
- Credit exposure: payments rely on Morgan Stanley; any deterioration in its credit spreads may affect market value.
- Limited liquidity: no exchange listing and secondary trading may be limited or at significant discount.
- Estimated fair value below par: initial value ≈ $938.90 versus $1,000 issue price due to fees and hedging costs.
- Upside may be capped: early automatic call limits gains to the fixed call premium.
Insights
TL;DR: Routine Morgan Stanley worst-of auto-call note: 49.5% one-year call premium, 200% upside thereafter, 35% buffer, full credit and equity risk.
Impact assessment: For Morgan Stanley (ticker MS) this is a standard medium-sized capital-markets issuance and is not material to earnings; for investors it offers attractive headline returns but embeds significant tail risk.
Positives for investors: a sizeable 49.5% call premium achievable after one year and 2× leveraged participation to the upside if held to maturity.
Negatives: principal is fully at risk below a 35% buffer on the worst performer, the note may be automatically called capping gains, secondary market liquidity is uncertain, and the estimated initial value is already about 6% below face. All cash flows depend on Morgan Stanley’s creditworthiness, and no interest coupons are paid.
Overall view: The structure suits investors seeking short-term high coupons and willing to bear dual-equity and credit risk. From an issuer perspective, it is a cost-effective funding mechanism leveraging retail distribution channels.
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Morgan Stanley Finance LLC Structured Investments |
Free Writing Prospectus to Preliminary Pricing Supplement No. 9,236 Filed pursuant to Rule 433 Registration Statement Nos. 333-275587; 333-275587-01 July 8, 2025 |
Market Linked Securities— Auto-Callable with Leveraged Upside Participation and Contingent Downside
Principal at Risk Securities Linked to the Lowest Performing of the Class A Common Stock of Alphabet, Inc. and the Common Stock of Target Corporation due July 21, 2028
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 stocks |
Class A common stock of Alphabet, Inc. (the “GOOGL Stock”) and the common stock of Target Corporation (the “TGT Stock”) |
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Pricing date* |
July 18, 2025 |
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Original issue date* |
July 23, 2025 |
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Face amount |
$1,000 per security |
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Automatic call |
If, on the call date, the stock closing price of the lowest performing underlying stock is greater than or equal to its starting price, the securities will be automatically called for the call payment on the call settlement date. |
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Call date* |
July 23, 2026 |
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Call settlement date |
Three business days after the call date |
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Call payment |
At least $1,495 per security, which corresponds to a call premium of at least approximately 49.50% of the face amount (to be determined on the pricing date). |
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Maturity payment amount (per security) |
If the securities are not automatically called prior to maturity, you will be entitled to receive on the maturity date a cash payment per security as follows: ●if the ending price of the lowest performing underlying stock is greater than its starting price: $1,000 + ($1,000 × stock return of the lowest performing underlying stock × participation rate) ●if the ending price of the lowest performing underlying stock is equal to or less than its starting price but greater than or equal to its threshold price: $1,000 ●if the ending price of the lowest performing underlying stock is less than its threshold price: $1,000 + $1,000 × (stock return of the lowest performing underlying stock) |
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Stock return |
For each underlying stock, (ending price - starting price) / (starting price) |
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Lowest performing underlying stock |
The underlying stock with the lower stock return |
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Maturity date* |
July 21, 2028 |
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Starting price |
For each underlying stock, the stock closing price on the pricing date |
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Ending price |
For each underlying stock, the stock closing price on the calculation day |
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Threshold price |
For each underlying stock, 65% of the starting price |
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Participation rate |
200% |
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Calculation day* |
July 18, 2028, subject to postponement for non-trading days and certain market disruption events. |
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Calculation agent |
Morgan Stanley & Co. LLC, an affiliate of the issuer and the guarantor |
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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 $25.75 for each security it sells. Dealers, including Wells Fargo Advisors (“WFA”), may receive a selling concession of up to $20.00 per security, and WFA may receive a distribution expense fee of $0.75 for each security sold by WFA. |
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CUSIP |
61778NJB8 |
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Tax considerations |
See preliminary pricing supplement |
Hypothetical payout profile**
**assumes a call premium equal to the lowest possible call premium that may be determined on the pricing date
If the securities are not automatically called prior to maturity and the ending price of EITHER underlying stock is less than its threshold price, you will be exposed to the decline in the stock closing price of the lowest performing underlying stock. You may lose more than 35%, and possibly all, of your investment.
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 $938.90, or within $38.90 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 “Estimated Value of the Securities” 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 referenced below, product supplement for principal at risk securities and prospectus, and the “Selected risk considerations” on the following page, before making a decision to invest in the securities.
Preliminary pricing supplement:
https://www.sec.gov/Archives/edgar/data/895421/000183988225037579/ms9236_424b2-20484.htm
*subject to change
** In addition, selected dealers may receive a fee of up to 0.30% for marketing and other services
The securities have complex features and investing in the securities involves risks not associated with an investment in ordinary debt securities. See “Selected risk considerations” in this term sheet and “Risk Factors” in the accompanying preliminary pricing supplement and product 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.
Risks Relating to an Investment in the Securities
●The securities do not pay interest or guarantee the return of the face amount of your securities at maturity.
●If the securities are automatically called prior to maturity, the appreciation potential of the securities is limited by the fixed call payment specified for the call date.
●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 stocks.
●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 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 Stocks
●You are exposed to the price risk of each underlying stock.
●Because the securities are linked to the performance of the lowest performing underlying stock, you are exposed to greater risk of sustaining a loss on your investment than if the securities were linked to just one underlying stock.
●No affiliation with Alphabet, Inc. or Target Corporation.
●We may engage in business with or involving Alphabet, Inc. or Target Corporation 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 stocks.
●Historical closing prices of the underlying stocks should not be taken as an indication of the future performance of the underlying stocks during the term of the securities.
For more information about the underlying stocks, 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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FAQ
What is the call premium for the Morgan Stanley (MS) 2025 Auto-Callable note?
How much downside protection does the note offer?
What is the leverage on positive performance at maturity?
Which stocks underlie the securities?
Are the securities insured by the FDIC?
Where can investors find the full preliminary pricing supplement?
