The decision by Uber Technologies Inc. and Lyft Inc. to file confidentially for initial public offerings sets in motion two of the most-anticipated tech IPOs in many years and will determine whether the two money-losing businesses can withstand wider investor scrutiny.

Uber and Lyft are racing to go public despite volatile equities markets. Lyft may be determined to go before its much larger rival sucks up all the oxygen. Uber’s investors have long pushed it toward an IPO, which would free them and employees to sell their shares.

Bankers have told Uber it could be worth US$120 billion on the public markets, people familiar with the matter have previously said, potentially making it the largest IPO next year and one of the five biggest of all time. Banks have pitched valuations for Lyft ranging from about US$18 billion to US$30 billion, according to people familiar with the matter.

When Will Uber and Lyft Go public?

Both companies filed confidentially -- meaning they sent the U.S. Securities and Exchange Commission financial documents without sharing the information publicly.

Non-public filings have become more common since mid-2017, when the SEC began letting all companies file early IPO or stock-listing regulatory documents confidentially -- a perk previously reserved for smaller businesses. The move opened the door for the SEC to review the material and provide feedback before Uber and Lyft publicly file their S-1s, which will likely include potentially sensitive financial information, risk factors, and other material details about the loss-making companies for prospective investors.

While Uber Chief Executive Officer Dara Khosrowshahi has said publicly that the company is targeting an offering in the second half of 2019, he has also considered moving up that date, people familiar with the matter have said, potentially creating a race to beat Lyft’s plan for a listing as soon as March or April. Filing confidentially may also give Khosrowshahi more flexibility to speed up the timing for the IPO without locking himself into an earlier date if market conditions prove unappealing, a consideration that has likely grown in importance amid volatile equity markets.

Is Money-Losing Uber Really Worth US$120 Billion?

That eye-popping valuation was sketched out to the company by Morgan Stanley and Goldman Sachs Group Inc., people familiar with the matter said earlier this year. Pitches from firms jockeying to convince a company that they’re the best to lead the deal are typical in the IPO process.

But if large consumer tech IPOs of the past couple years are any guide, that 12-digit number should be taken with a grain or two of salt. Both photo-sending app Snap Inc. and Chinese smartphone-maker Xiaomi Corp. had eyes on big valuations, only to see their numbers cut by half when it came to actually selling shares to investors.

For investors, Uber’s valuation will largely come down to its financials. In a bond offering earlier this year, the company said it expected to generate US$10 billion to US$11 billion in net revenue in 2018, without logging a profit for at least three more years.

Which Investment Bank Will Rule Tech IPOs?

While Uber hasn’t selected a lead banker for the share sale, Morgan Stanley played a key role in helping the company write its IPO prospectus, a person familiar with the matter has said. Lyft is working with JPMorgan Chase & Co., Credit Suisse Group AG and Jefferies Financial Group Inc., to lead an IPO possibly as soon as March or April, people familiar with the matter have said.

Morgan Stanley and Goldman Sachs have dominated the fierce contest among Wall Street banks to bring technology companies to market in the U.S. over the past five years. Morgan Stanley currently has the lead by a narrow margin, with a market share of 13.5 percent, while Goldman Sachs in No. 2, with 11.2 per cent, according to data compiled by Bloomberg.

Both firms have secured roles on the biggest deals, which include First Data Corp.’s $2.82 billion IPO in 2015, IMS Health Holdings Inc.’s US$1.5 billion first-time sale in 2014 and GreenSky Inc.’s US$1.01 billion deal in April. But while Morgan Stanley made an estimated US$12.5 million in fees from First Data, Goldman Sachs got roughly US$1.8 million as more than 15 firms competed for a slice of the pie, the data show. On the IMS deal, the two found themselves neck-and-neck with JPMorgan Chase & Co., with each commanding an estimated US$13.6 million in fees.