The hedge fund owns a stake of more than 10% valued at more than $800 million in the file-sharing service provider, Reuters reported. Dropbox has a market cap of about $11 billion.
Elliott, which is run by billionaire Paul Singer, has said that it is Dropbox's largest shareholder after CEO and co-founder Drew Houston. The hedge fund overtook Vanguard Group Inc. as the largest shareholder outside of Houston. Vanguard had a stake just below 10% as of March 31, according to Bloomberg.
Houston's stake in the company insulates Dropbox from any change without his approval. Houston owns more than 70% of the company's voting shares.
The hedge fund has not made it clear whether it is seeking seats on Dropbox's board or other changes at the company.
The stock jumped as much as 8% Wednesday after the Wall Street Journal first reported the news, but shares pared gains and finished the day up 3.9% to $27.86.
Earlier this year, Dropbox said it would purchase secure-document-sharing provider Docsend for $165 million cash.
The deal comes after remote work has seen a quick and sustained rise due to pandemic lockdowns and social-distance requirements.
Dropbox and Docsend had already been collaborating since 2019 as part of Dropbox’s extension partner program.
The purchase of Docsend is not expected to affect Dropbox’s 2021 earnings. Dropbox expects to close the deal this month.