IDS (LON: IDS) share price is having a good week. Shares of the parent company of Royal Mail (LON:IDSI) Group rose by more than 10% on Tuesday, making it the best-performing FTSE 250 company.
The stock jumped to a high of 267.2p, its highest point since October 2nd. It has soared by more than 40% this year, making it one of the top-performing companies in the FTSE 250 index.
Why is IDS stock rising?
IDS stock price has jumped even as challenges in its business continue and its total losses mount. The most recent results showed that the company lost over 194 million pounds, a 53% increase from the same period in 2022. Its revenues in the first half of the year remained at 5.9 billion pounds, helped by its logistics business.
In its statement, the company attributed its losses to a deal it signed with its union, which staged prolonged strikes in late 2022 and earlier this year. In the deal, the company boosted salaries by 10%. It also made a lump sum payment of 500 pounds per staff.
IDS will not be profitable for a while. The current CEO believes that the company’s first profit will come in 2025. I believe that It will take longer to move back to profits as competition in the industry widens.
Amazon (NASDAQ:AMZN) is one of the delivery companies that is seeking to gain market share. The company, which launched its delivery services in the UK five years ago, has gained a 17% market share. It delivers 900 million parcels every year.
Therefore, IDS stock price has done well this year because of the end of its strike that ensures work continuity. Also, Ofcom has been open to changing the company’s regulations on deliveries.
In September, the regulator said that it was reviewing Royal Mail’s obligations to remote areas that cost ot millions of pounds every year. The current laws mandate Royal Mail to deliver mail and parcels to all parts of the UK.
What next for Royal Mail share price?
IDS stock price has done well this year even as the company faced substantial risks such as rising losses. On the daily chart, we see that the stock faced a strong resistance point at 277.2p, the highest point in July. It has moved above the 50-day and 100-day moving averages, which is a bullish sign.
IDS has also formed a triangle pattern. Therefore, I suspect that the stock will remain in this range for the remaining part of the year. It will then have a bearish breakout to about 200p in the first quarter of 2024.
This article first appeared on Invezz.com
