On December 6, the transportation tech startup Lyft filed paperwork to go public sometime in 2019. The initial public offering (IPO) filing with the Securities and Exchange Commission (SEC) revealed that Lyft hired JPMorgan Chase (JPM  ), Credit Suisse (CS  ), and Jefferies (JEF  ) as underwriters. The San Francisco-based firm was valued at $15 billion in its last private fundraising round. Lyft did not specify the number of shares it was selling or the price range in its filing. Analysts believe that Lyft could go public as early as the first quarter of 2019, based on when the SEC approves its filing. Lyft's valuation will likely end up between $20 billion and $30 billion.

Lyft was founded in 2012 by John Zimmer and Logan Green and has raised close to $5 billion so far. Uber and Lyft are racing to be the first to go public. Uber, the older firm founded in 2009, has an investment provision from SoftBank that Uber must file for an IPO before September 30 or allow restrictions on shareholder stock transfers to expire. The competition seems good for both firms, as Uber can do an even bigger IPO aiming at $120 billion if Lyft first trades at a high multiple. While Lyft continues to grow faster than Uber, its largest competitor, it also continues to lose money. Retail investors in Silicon Valley and beyond are excited because the Uber and Lyft IPOs will be the first opportunities for them to own a piece of the growing ridesharing market.

The business models of Lyft and Uber are similar. They both earn revenue by taking a cut on rides booked through their phone apps. Both Uber and Lyft have lost huge amounts of money from spending heavily competing with each other for passengers, drivers, and market share. In the third quarter, Lyft reported revenue of $563 million and a loss of $254 million in the quarter. The companies want to boost profitability by eventually replacing human drivers with robots piloting self-driving vehicles, but a future of consumers and businesses served by fleets of driverless cars is years away due to the technical and regulatory challenges.

The Uber and Lyft IPOs face many potential headwinds. First are labor challenges, as drivers for both companies argue that they are not independent contractors but employees. If drivers receive a favorable ruling, then the ridesharing business model will be disrupted. Also, investors' appetite for risky tech stocks may have soured in the wake of the Trump trade wars and global equities market corrections. The success of the race to go public will shape the future of transportation.

The author does not hold any positions in any of the securities above.