'It's hard not to expect things to get worse' for digital media; buy Spotify - LightShed
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LightShed Partners analyst Rich Greenfield said Tuesday that the signals coming from digital media companies so far this earnings season point to an ongoing slowdown in the space, with lower ad spending and declines in subscriber bases.
"It's hard not to expect things to get worse," the partner and media and technology analyst at LightShed Partners told CNBC.
In making his case, Greenfield pointed to recent earnings from Snap (SNAP), which sparked a selloff in the sector. He also noted results from Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), which indicated slowing growth in the firm's YouTube business.
With results due out from Meta Platforms (META) after the closing bell, Greenfield contended that social media firms have faced dramatic competition from TikTok, which has taken share from the likes of META, SNAP and YouTube.
"In an ad market that's not growing, you've got TikTok taking big share. And it's where advertisers want to be," he said. 
"[TikTok is] just a problem for all these companies and I don't see a way around it until the overall ad market is reinvigorated and ... I don't know when that is," the analyst added.
Asked about bright spots in the sector, Greenfield pointed to Spotify (SPOT), arguing that the company lacks the same level of competition as some of the other big names.
"They have very little competition. They dominate the category. ... Yes, it is a low base, but they are certainly growing faster than peers," the LightShed analyst said of SPOT.

For another perspective on SPOT, see a deep dive by Seeking Alpha contributor Stock Metal Investment, which said the company's recent investor day "raised more questions than it answered."