Morgan Stanley Issues Callable Contingent Income Buffered Securities Linked to Bitcoin ETF

Structured Investment Framework and Issuer Guarantees

Morgan Stanley Finance LLC has structured these securities as unsecured obligations that carry a full and unconditional guarantee from Morgan Stanley, the parent company. The instruments are issued as part of MSFL's Series A Global Medium-Term Notes program and represent a principal-at-risk security designed for investors willing to accept capital loss in exchange for enhanced income potential. The stated principal amount is $1,000 per security, with an issue price matching the stated principal. The estimated value on the pricing date was approximately $981.30 per security, or within $25.00 of that estimate.

These securities do not guarantee repayment of principal and provide no regular interest payments independent of underlying asset performance. The issuance structure incorporates a call feature that allows Morgan Stanley to redeem the securities early based on a risk-neutral valuation model output, provided economic conditions make redemption rational for the issuer. The securities are registered under Securities and Exchange Commission Registration Statement Nos. 333-293641 and 333-293641-01, with the pricing supplement filed July 23, 2026, pursuant to Rule 424(b)(2).

Contingent Coupon Terms and Observation Schedule

The securities offer a contingent coupon at an annual rate of 16.30%, payable on each coupon payment date only if the closing level of the iShares Bitcoin Trust ETF meets or exceeds the coupon barrier level on the related observation date. The coupon barrier level is established at $29.872, representing 80% of the initial level. If the closing level of the underlier falls below the coupon barrier on any observation date, no interest will be paid with respect to the applicable interest period. This contingent structure means investors face the risk of receiving no coupons over the entire security term, despite the nominal annual rate.

Coupon payment dates are scheduled throughout the security term, with any payment not occurring on a business day being made on the next succeeding business day without adjustment to the coupon amount. The final observation date is January 22, 2027, subject to postponement for non-trading days and certain market disruption events. The coupon payment with respect to the final observation date will be made on the maturity date of January 27, 2027. This monthly observation structure ties investor returns directly to Bitcoin ETF performance at regular intervals.

Early Redemption Mechanics and Callable Features

Beginning August 27, 2026, the securities become callable at Morgan Stanley's discretion if economic conditions warrant redemption. The determination of whether redemption occurs relies on a risk-neutral valuation model that incorporates prevailing reference market levels, volatilities, correlations, and Morgan Stanley's credit spreads as of the pricing date. The calculation agent selects a determination date no earlier than three business days before the observation date preceding each potential redemption date and no later than such observation date. If the model indicates that redemption is economically rational compared to not redeeming, Morgan Stanley will exercise the call.

Scheduled redemption dates occur on August 27, September 25, October 27, November 27, and December 28, 2026. Importantly, the securities are explicitly not subject to early redemption until the first redemption date of August 27, 2026. If redeemed early, investors receive the stated principal amount plus any contingent coupon otherwise due with respect to the relevant interest period. Once redeemed, no further payments will be made on the securities. Notice of redemption will be provided no later than the observation date preceding the specified redemption date, limiting investor reaction time.

Payment at Maturity and Downside Protection Structure

The maturity payment structure incorporates a buffer feature that provides limited downside protection while eliminating upside participation in Bitcoin ETF appreciation. If the securities remain outstanding through maturity and the final level of the iShares Bitcoin Trust ETF is greater than or equal to the buffer level, investors receive the stated principal amount in addition to any contingent coupon payable with respect to the final observation date. However, if the final level falls below the buffer level, investors experience magnified losses through a downside factor mechanism.

Specifically, if the final level is less than the buffer level, the payment at maturity equals the stated principal amount plus the stated principal amount multiplied by the underlier percent change plus the buffer amount, multiplied by the downside factor. This structure means investors lose 1.25% for every 1% decline in the level of the underlier beyond the specified buffer amount. Under adverse market conditions, the payment at maturity could be significantly less than the stated principal amount and potentially zero. The filing states that investors will not participate in any appreciation of the underlier, capping upside exposure while maintaining full downside risk.

Underlying Asset and Strike Parameters

The securities are based on the performance of the iShares Bitcoin Trust ETF, a publicly traded fund designed to provide exposure to Bitcoin. The strike date for the securities is July 22, 2026, with the pricing date established as July 23, 2026. The original issue date is July 28, 2026, providing a brief window between pricing and issuance. The final observation date for determining maturity payments is January 22, 2027, subject to adjustment for non-trading days and certain market disruption events beyond market participants' control.

The selection of an existing, actively traded Bitcoin ETF as the underlying reference asset provides transparent pricing and eliminates disputes regarding valuation. However, the securities' performance remains entirely dependent on Bitcoin's market value fluctuations during the security term, creating concentrated directional exposure. The specific choice of the iShares Bitcoin Trust ETF indicates Morgan Stanley's target market includes institutional and fee-based advisory accounts seeking structured Bitcoin exposure without direct cryptocurrency custody or exchange-trading obligations.

Credit Risk and Guarantor Obligations

All payments on the securities are subject to Morgan Stanley's credit risk, creating direct counterparty exposure for investors. The filing explicitly states that if Morgan Stanley defaults on its obligations, investors could lose some or all of their investment. While Morgan Stanley Finance LLC issues the securities as unsecured obligations, the full and unconditional guarantee from Morgan Stanley provides a second layer of credit support. However, this guarantee extends only to Morgan Stanley's own financial stability and ability to meet obligations when due.

The securities are not secured obligations, and investors will not have any security interest in or otherwise have any access to the underlying reference asset or assets. This unsecured status means investors have no claim to the iShares Bitcoin Trust ETF itself or to any underlying Bitcoin holdings. 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. Investors depend entirely on Morgan Stanley and MSFL's creditworthiness for repayment.

Investor Risk Profile and Suitability Considerations

Morgan Stanley has explicitly stated that these securities are designed for investors who are willing to risk their principal and accept the risk of receiving no coupons over the entire security term. The filing indicates that investors must also accept the risk of early redemption based on the output of a risk-neutral valuation model, a feature entirely within Morgan Stanley's discretion. In exchange for these risks, investors gain exposure to the buffer feature and the opportunity to earn interest at a potentially above-market rate. The 16.30% contingent coupon reflects compensation for the principal-at-risk structure and the probability that coupon barriers may not be met.

The document emphasizes that investors in these securities must be willing to accept the risk of losing their entire initial investment. The principal-at-risk structure means that unlike traditional bonds or notes, these securities offer no guarantee of principal recovery. The combination of contingent coupon payments, early call features, and downside leverage creates a complex risk-return profile suitable only for investors with sophisticated understanding of structured derivatives and Bitcoin price movements. The filing notes these securities will be sold only to investors purchasing in fee-based advisory accounts, indicating a targeting of institutional and high-net-worth individuals with access to professional advisory support.

Distribution and Pricing Methodology

Morgan Stanley & Co. LLC, an affiliate of MSFL and a wholly owned subsidiary of Morgan Stanley, serves as the agent for distribution. According to the filing, MS & Co. expects to sell all securities it purchases from MSFL to an unaffiliated dealer at a specified price per security for further sale to certain fee-based advisory accounts at the public price of $1,000 per security. Importantly, MS & Co. will not receive a sales commission with respect to the securities, distinguishing this distribution from traditional commission-based offerings.

The estimated value on the pricing date of approximately $981.30 per security reflects a discount from the stated principal amount, indicating that the option features embedded in the securities reduce their theoretical value on issuance. The pricing reflects Morgan Stanley's internal valuation using risk-neutral methodologies that account for the contingent coupon, call feature, and downside leverage. The commission and fee structures are noted in the pricing supplement but specific dollar amounts per security and in aggregate were not disclosed in the filing.

Reference Documentation and Regulatory Framework

These securities incorporate terms described in the accompanying product supplement dated April 8, 2026, the tax supplement dated April 8, 2026, and the prospectus dated April 8, 2026. Investors are required to read the preliminary pricing supplement together with these related documents to understand the complete terms and conditions. The filing was made pursuant to Rule 424(b)(2) under the Securities Act of 1933, establishing that this preliminary pricing supplement relates to a registered public offering of securities.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, nor have they determined whether the pricing supplement or accompanying documents are truthful or complete. This standard regulatory disclaimer reflects the SEC's position that approval constitutes only confirmation of filing completeness, not endorsement of the securities' investment merits or appropriateness. Investors should understand that regulatory filing does not constitute validation of risk disclosures or suitability for any particular investor category.