Free Writing Prospectus - Filing Under Securities Act Rules 163/433 (fwp)
October 23 2020 - 5:02AM
Edgar (US Regulatory)
Morgan Stanley
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Free
Writing Prospectus to Preliminary Terms No. 5,123
Registration
Statement Nos. 333-221595; 333-221595-01
Dated
October 22, 2020; Filed pursuant to Rule 433
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3-Year QCOM Contingent Income Auto-Callable Securities
This document provides a summary of the terms of
the securities. Investors must carefully review the accompanying preliminary terms referenced below, product supplement and prospectus,
and the “Risk Considerations” on the following page, prior to making an investment decision.
Summary Terms
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Issuer:
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Morgan Stanley Finance LLC
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Guarantor:
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Morgan Stanley
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Underlying stock:
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QUALCOMM Incorporated common stock (“QCOM”)
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Stated principal amount:
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$10 per security
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Issue price:
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$10 per security
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Pricing date:
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October 30, 2020
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Original issue date:
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November 4, 2020 (3 business days after the pricing date)
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Maturity date:
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November 2, 2023
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Early redemption:
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If, on any of the first eleven determination dates, the determination closing price of the underlying stock is greater than or equal to the initial share price, the securities will be automatically redeemed for an early redemption payment on the third business day following the related determination date. No further payments will be made on the securities once they have been redeemed.
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Early redemption payment:
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The early redemption payment will be an amount equal to (i) the stated principal amount plus (ii) the contingent quarterly coupon with respect to the related determination date.
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Determination closing price:
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The closing price of the underlying stock on any determination date other than the final determination date times the adjustment factor on such determination date.
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Contingent quarterly coupon:
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· If,
on any determination date, the determination closing price or the final share price, as applicable, is greater than or
equal to the downside threshold price, we will pay a contingent quarterly coupon at an annual rate of 10.75% (corresponding to
approximately $0.26875 per quarter per security) on the related contingent payment date.
· If,
on any determination date, the determination closing price or the final share price, as applicable, is less than the downside
threshold price, no contingent quarterly coupon will be paid with respect to that determination date.
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Determination dates:
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February 1, 2021, April 30, 2021, July 30, 2021, November 1, 2021, January 31, 2022, May 2, 2022, August 1, 2022, October 31, 2022, January 30, 2023, May 1, 2023, July 31, 2023 and October 30, 2023, subject to postponement for non-trading days and certain market disruption events. We also refer to October 30, 2023 as the final determination date.
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Contingent payment dates:
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With respect to each determination date other than the final determination date, the third business day after the related determination date. The payment of the contingent quarterly coupon, if any, with respect to the final determination date will be made on the maturity date.
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Payment at maturity1:
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· If the final share price is greater than or equal to the downside threshold price:
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(i) the stated principal amount plus (ii) the contingent quarterly coupon with respect to the final determination date
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· If the final share price is less than the downside threshold price:
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(i) the stated principal amount multiplied by (ii) the share performance factor
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Share performance factor:
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Final share price divided by the initial share price
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Adjustment factor:
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1.0, subject to adjustment in the event of certain corporate events affecting the underlying stock
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Downside threshold price:
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60% of the initial share price
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Initial share price:
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The closing price of the underlying stock on the pricing date
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Final share price:
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The closing price of the underlying stock on the final determination date times the adjustment factor on such date
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CUSIP / ISIN:
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61771G145 / US61771G1452
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Preliminary terms:
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https://www.sec.gov/Archives/edgar/data/895421/
000095010320020454/dp139130_fwp-ps5123.htm
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Hypothetical Payout
at Maturity1
(if the securities
have not previously been redeemed)
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Change in Underlying
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Payment at Maturity (excluding any coupon payable at maturity)
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+40%
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$10.00
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+30%
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$10.00
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+20%
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$10.00
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+10%
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$10.00
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0%
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$10.00
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-10%
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$10.00
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-20%
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$10.00
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-30%
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$10.00
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-40%
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$10.00
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-41%
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$5.90
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-50%
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$5.00
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-60%
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$4.00
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-70%
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$3.00
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-80%
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$2.00
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-90%
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$1.00
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-100%
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$0
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1All payments are subject to our credit risk
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The issuer has filed a registration
statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should
read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information
about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov.
Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus
if you request it by calling toll-free 1-800-584-6837.
Underlying Stock
For more information about the underlying stock, including historical
performance information, see the accompanying preliminary terms.
Risk Considerations
The risks set forth below are discussed in more detail
in the “Risk Factors” section in the accompanying preliminary terms. Please review those risk factors carefully prior
to making an investment decision
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·
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The securities do not guarantee the return
of any principal.
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·
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You will not receive any contingent quarterly
coupon for any quarterly period where the determination closing price is less than the downside threshold price.
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·
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The contingent quarterly coupon, if any, is
based solely on the determination closing price or the final share price, as applicable.
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·
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Investors will not participate in any appreciation
in the price of the underlying stock.
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·
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The automatic early redemption feature may
limit the term of your investment to approximately three months. If the securities are redeemed early, you may not be able to reinvest
at comparable terms or returns.
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·
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The market price will be influenced by many
unpredictable factors.
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·
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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.
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·
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As a finance subsidiary, MSFL has no independent
operations and will have no independent assets.
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·
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Investing in the securities is not equivalent
to investing in the common stock of QUALCOMM Incorporated.
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·
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No affiliation with QUALCOMM Incorporated.
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·
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We may engage in business with or involving
QUALCOMM Incorporated without regard to your interests.
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·
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The antidilution adjustments the calculation
agent is required to make do not cover every corporate event that could affect the underlying stock.
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·
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The securities will not be listed on any securities
exchange and secondary trading may be limited.
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·
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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 original issue price reduce the economic terms of the securities, cause the estimated value of the securities
to be less than the original issue price and will adversely affect secondary market prices.
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·
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The estimated value of the securities is approximately
$9.576 per security, or within $0.45 of that estimate, and 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.
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·
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Hedging and trading activity by our affiliates
could potentially adversely affect the value of the securities.
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·
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The calculation agent, which is a subsidiary
of Morgan Stanley and an affiliate of MSFL, will make determinations with respect to the securities.
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·
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The U.S. federal income tax
consequences of an investment in the securities are uncertain.
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Tax Considerations
You should review carefully the discussion in the accompanying
preliminary terms under the caption “Additional Information About the Securities–Tax considerations” concerning
the U.S. federal income tax consequences of an investment in the securities, and you should consult your tax adviser.
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