As ride-hailing giants Uber and Lyft both eye initial public offerings within the next year, a Gies College of Business professor sees a significant advantage for the smaller Lyft to go public first.

“If they’re the first company in a category, they have the ability to tell their story the way they want it to be told,” said Rob Metzger, a clinical assistant professor of finance.

In other words, as the smaller of the two companies, it’s better for Lyft if Uber has to compare itself their junior competitor – rather than Lyft trying to compare itself to the much larger Uber.

“One IPO could have an impact on the other IPO,” Metzger said. “There’s a bunch of game theory going on about who’s first to go public, how do they position it, etc. Those are the issues I imagine they are discussing in their boardrooms.”

During Metzger’s 20 years in the investment banking industry, he has helped more than 50 companies go public. He now serves as the director of the Investment Banking Academy at Gies College of Business. He cautions that Uber and Lyft should not get too caught up in what the other is doing, and their motivations and timeline for going public should be based primarily on what’s best for their own company.

Uber, whose IPO is being led by Morgan Stanley and Goldman Sachs, is likely to go public in late 2019. Uber’s estimated $120 billion valuation would be the biggest market capitalization for any IPO since Alibaba Group of China in 2014. Lyft selected JPMorgan Chase to lead its IPO. It plans to go public first in the spring of 2019, and could be valued at around $15 billion.

“Even though both companies are very large, they’re still in an emerging category, meaning it’s difficult to predict the way their businesses are going to evolve,” said Metzger. “Oftentimes you will see earlier stage high-growth companies go public, and they’ll either beat or miss earnings targets by wide margins.”

That volatility makes their futures hard to predict. Both companies are losing money. In 2017, Uber told Bloomberg it was still losing billions of dollars every year, with a net revenue of $6.5 billion offset by adjusted net losses of $2.8 billion. According to Bloomberg, Lyft lost about $600 million in 2016. Even with those net losses for both companies, Metzger doesn’t believe they’re going public just to raise money.

“Companies have chosen to stay private for a lot longer thanks to the growth of available private capital in the venture capital world,” he said. “It used to be you got to a certain point where you had to tap the public market in order to raise the right amount of growth capital; now there are so many avenues a company can go to fund their business for a long period of time.”

Instead, Metzger sees Uber and Lyft’s motivation to go public as threefold: providing liquidity to shareholders, allowing the companies to perform more corporate transactions, and serving as a branding event. That’s where he sees the advantage for Lyft to public first.

“I think the Lyft team feels that, even though they’re significantly smaller, they believe that their financial metrics are better, their operating metrics are better, and they haven’t had some of the negative press that Uber has had. So they may want to be out on the forefront to tell that story, as opposed to being in Uber’s shadow.”

That shadow is large. Uber operates in almost 800 cities worldwide, and it completed about four billion rides in 2017. Lyft, on the other hand, runs in approximately 300 cities and the company told Forbes in 2017 it completed 375.5 million rides. Metzger says when it’s all said and done, there will be lessons for everyone to learn, regardless of whether they have an interest in the ride-hailing industry. One of those is business extensibility. Uber has been much more aggressive in pursuing ventures like Uber Eats, and most recently, it announced a subscription service that allows riders to avoid surge pricing on UberX and UberPool. Lyft launched its own subscription service two weeks earlier.

“What I think we’ll learn is how the public markets perceive the efficiency by which private markets have valued businesses, and I think this applies to a lot of these unicorns over the next several years,” said Metzger. “There have been a lot of companies that have raised a significant amount of money with valuations that don’t have as much transparency as the public market valuations would be.”