SM Energy Co (NYSE: SM) saw its stock price plummet 5.19% in pre-market trading on Tuesday, following the announcement of a $12.8 billion merger deal with Civitas Resources. The merger, aimed at creating one of the largest independent U.S. oil producers with a significant presence in the Permian Basin, appears to have raised concerns among investors about SM Energy's future.

Adding to the downward pressure, Susquehanna cut its target price for SM Energy to $21 from $24, signaling reduced expectations for the company's near-term performance. This adjustment may have further contributed to the negative sentiment surrounding the stock.

The company also filed an amendment to its 10-Q quarterly report for the period ended September 30, 2025, and disclosed a new risk related to the merger agreement. According to the disclosure, "The Merger Agreement significantly limits SM Energy's ability to pursue alternative strategic transactions and to conduct its business prior to the completion of the merger." This constraint on SM Energy's strategic flexibility could be another factor weighing on investor confidence.