When it comes to consumer internet stocks, investors might be eyeing Lyft (LYFT 1.87%) as a potential buying opportunity right now.

Its revenue growth accelerated in the most recent quarter, and it enjoys a strong competitive advantage thanks to network effects. And its stock, which is 80% below its peak price, currently trades at an affordable price-to-sales ratio of 1.3.

These might appear to be compelling arguments for scooping up shares of Lyft, but this would be the wrong move because its chief rival is the better stock to buy in 2024.

Here are three reasons why investors should consider adding Uber (UBER -0.38%) to their portfolios instead.

Better finances

During the second quarter, Uber hit two major financial milestones. It produced its first-ever operating profit, totaling $326 million. This was a huge improvement from a $713 million operating loss in the year-ago period. Additionally, Uber generated more than $1 billion in quarterly free cash flow, another first for the business.

The momentum continued in the third quarter when Uber reported operating income of $394 million. Strong demand and ongoing cost cuts are helping the company, which saw Q3 revenue and gross bookings rise 11% and 21%, respectively.

Lyft, on the other hand, posted an operating loss of $40 million in the third quarter. And its revenue and gross bookings grew at slower rates than Uber's.

That inferior financial performance partly explains why Lyft stock (up 41%) has seriously lagged that of its larger peer (up 149%) in 2023.

Scale advantages

With quarterly gross bookings (for the mobility segment) of $17.9 billion and an active customer base of 142 million (both mobility and delivery segments), Uber is substantially larger than Lyft, which had gross bookings of $3.6 billion and active riders of 22.4 million in Q3. Of course, Uber operates on a global stage, while Lyft is only available in the U.S. and Canada. That said, estimates show that Uber controls a whopping 76% share of the ridesharing market domestically.

We're already seeing the scale advantages for Uber in its bottom-line performance where it's starting to gain some operating leverage. However, I think its larger size is a major benefit in another way.

Both Uber and Lyft benefit from network effects. But a business that has more riders and drivers on its platform is more valuable to its user base than one that has fewer because more connections can be made. A denser network in a particular city can lead to lower wait times and more favorable pricing. Indeed, the average Uber ride is cheaper than the average Lyft ride. This creates a better user experience.

Diversified operations

Just under half of Uber's gross bookings in Q3 came from its delivery segment, making it an important contributor to the company's results. Having two distinct segments helps Uber in many ways.

From a driver's perspective, the ability to earn income in different ways makes working for Uber potentially more lucrative than it would be for Lyft. That's critical for keeping this key group of stakeholders satisfied.

Uber is also better able to adjust to various economic conditions. For example, the delivery business boomed during the pandemic's lockdown phase, picking up some slack for a mobility segment that naturally suffered from severe slowdowns at that time. Should an economic downturn occur in 2024, a similar business shift could play out as consumers stay at home more often to save money.

Lastly, thanks to these different services, Uber is able to collect more data than Lyft. This can better inform strategic initiatives, which can ultimately strengthen its competitive standing.

It's time to forget Lyft. Instead, consider buying Uber stock in 2024.