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These are the next catalysts that will drive Peloton shares higher, trader says

One stay-at-home beneficiary is showing off its muscles.

Peloton shares are up more than 130% this year and hit an all-time high earlier this week.

Todd Gordon, managing director of Ascent Wealth Partners, is a longtime bull on the stock and said its spin higher may just be getting started. He sees a few factors driving the next leg of the rally.

“Seems like an endless summer here in the Northeast — from warm weather that started in May — will go on forever. It won’t. It’s easy to forget that winter is right around the corner, gyms continue to be closed and if they’re open, we see people opting to stay away, which we feel will keep demand for the bikes elevated,” Gordon said on CNBC’s “Trading Nation” on Thursday.

He said that confluence of events, coupled with a reported 10-week delivery period, should keep bulls rushing in to Peloton shares through to its earnings report scheduled for Sept. 10.

That release should also prove an upside catalyst to the stock, Gordon said.

“The last report in Q3, they exceeded revenue expectations by pretty healthy margins, and we expect them to do so again in Q4. Their subscription revenue – that $40 a month is key – and accounted for about 19% of their overall earnings,” he said. “Subscription churn is very low, reported to be about 1% … while the subscriber count is expected to go up to over a million.”

The shares spiked 13% the day after Peloton’s last report on May 6.

To ride a move higher into and post-earnings, Gordon is buying a 70 call with September 18 expiration and selling an 80 call. He notes that Peloton has built a steady band of support at $60 that should act as a base for the stock. It closed Friday at $68.30, down 2%.

Disclosure: Ascent Wealth Partners holds PTON. 

Disclosure: CNBC parent Comcast-NBCUniversal is an investor in Peloton.


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