Morgan Stanley Finance LLC
12/17/2024 | Press release | Distributed by Public on 12/17/2024 12:32
Free Writing Prospectus (Form FWP)
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Morgan Stanley Finance LLC Structured Investments |
Free Writing Prospectus to Preliminary Pricing Supplement No. 5,440 Filed pursuant to Rule 433 Registration Statement Nos. 333-275587; 333-275587-01 December 17, 2024 |
Market Linked Securities-Auto-Callable with Contingent Coupon and Contingent Downside
Principal at Risk Securities Linked to the Lowest Performing of the Common Stock of Advanced Micro Devices, Inc., the Common Stock of Eli Lilly and Company and the Technology Select Sector SPDR® Fund due December 30, 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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Underlyings |
Common stock of Advanced Micro Devices, Inc. (the "AMD Stock"), common stock of Eli Lilly and Company (the "LLY Stock") and the Technology Select Sector SPDR® Fund (the "XLK Shares") We refer to each of the AMD Stock and the LLY Stock as an "Underlying Stock" and the XLK Shares as a "Fund", collectively, the "Underlyings." |
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Pricing date* |
December 30, 2024 |
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Original issue date* |
January 3, 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 closing price of the lowest performing underlying on the related calculation day is greater than or equal to its 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 17.00% 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 June 2025, the closing price of each underlying is greater than or equal to its respective 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 24th of each March, June, September and December, commencing in March 2025 and ending on the final calculation day. We also refer to the December 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 closing price of each underlying on the final calculation day is greater than or equal to its respective downside threshold price: $1,000; or ●if the closing price of any underlying on the final calculation day is less than its respective downside threshold price: $1,000 × performance factor of the lowest performing underlying on the final calculation day |
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Maturity date* |
December 30, 2027 |
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Closing price |
The "closing price" for each Underlying (or one unit of any other security for which a closing price must be determined) on any trading day means the product of (i) the official closing price on such day published by the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which such Underlying (or any such other security) is listed or admitted to trading, and (ii) the adjustment factor applicable to such Underlying on such trading day. |
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Starting price |
For each Underlying, its closing price on the pricing date |
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Ending price |
For each Underlying, the respective closing price on the final calculation day |
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Adjustment factor |
With respect to each Underlying, 1.0, subject to adjustment in the event of certain events affecting such Underlying |
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Lowest performing underlying |
On any calculation day, the underlying with the lowest performance factor on that calculation day |
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Performance factor |
With respect to each underlying, on any calculation day, its closing price on such calculation day divided by its starting price |
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Coupon threshold price |
65% of the starting price for each underlying |
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Downside threshold price |
65% of the starting price for each underlying |
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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 $23.25 for each security it sells. Dealers, including Wells Fargo Advisors ("WFA"), may receive a selling concession of up to $17.50 per security, and WFA may receive a distribution expense fee of $0.75 for each security sold by WFA. |
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CUSIP |
61777RMA8 |
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Tax considerations |
See preliminary pricing supplement |
*Subject to change
** In addition, selected dealers may receive a fee of up to 0.30% 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 closing price of any underlying on the final calculation day is less than its downside threshold price, you will lose more than 35%, 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 any underlying, but you will have full downside exposure to the lowest performing underlying on the final calculation day if the closing price of that underlying on the final calculation day is less than its 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 $921.80, or within $21.80 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, index supplement and prospectus before making a decision to invest in the securities.
Preliminary Pricing Supplement:
https://www.sec.gov/Archives/edgar/data/895421/000183988224045537/ms5440_424b2-26542.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, index supplement 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 value of each underlying on only the related quarterly calculation day at the end of the related interest period. ●Investors will not participate in any appreciation in any underlying. ●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 underlyings or in the stocks composing the share underlying index with respect to the XLK Shares. ●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 Underlyings ●You are exposed to the price risk of each underlying. ●Because the securities are linked to the performance of the lowest performing underlying, you are exposed to greater risks of receiving no contingent coupon payments and sustaining a significant loss on your investment than if the securities were linked to just one underlying. ●Investing in the securities exposes investors to risks associated with investments with a concentration in the technology sector. ●The performance and market price of the XLK Shares, particularly during periods of market volatility, may not correlate with the performance of the share underlying index, the performance of the component securities of the XLK Shares underlying index or the net asset value per share of the XLK Shares. ●Adjustments to the XLK Shares or the index tracked by the XLK Shares could adversely affect the value of the securities. ●Historical prices of the underlyings should not be taken as an indication of the future performance of the underlyings during the term of the securities. ●The anti-dilution adjustments the calculation agent is required to make do not cover every event that could affect the XLK Shares. ●No affiliation with Advanced Micro Devices, Inc. or Eli Lilly and Company. ●We may engage in business with or involving Advanced Micro Devices, Inc. or Eli Lilly and Company without regard to your interests. ●The anti-dilution adjustments the calculation agent is required to make do not cover every corporate event that could affect the underlying stocks. |
For more information about the underlyings, 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 and the index 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, the index 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, index 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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