Elliott Management has acquired a significant stake in Dropbox (DBX -0.34%), according to a report in The Wall Street Journal citing "people familiar with the matter." The activist hedge fund told Dropbox executives that it's the company's largest shareholder, excluding CEO Drew Houston. That suggests Elliott Management has acquired a position of more than 10% in the file-sharing service provider. 

The hedge fund has been having private discussions with Dropbox executives since earlier this year, according to the report, though it isn't clear exactly what changes Elliott Management is suggesting.

A person sitting cross-legged working remotely with a laptop showing video conferencing and workplace collaboration software.

Image source: Getty Images.

A regulatory filing from early April showed that Vanguard Group owned a 9.4% stake, which suggests Elliott Management's position could be worth roughly $878 million. But the hedge fund will face an uphill battle, as Houston, who co-founded the company, controls nearly 72% of the voting power due to the company's dual-class share structure. 

Dropbox offers cloud-based storage that allows users to save photos, documents, and videos online. It also provides tools for teams to collaborate on documents. The company went public back in early 2018, opening at $29. Except for a brief surge in June 2018, Dropbox stock has spent most of the past three years trading below its IPO price.

Many of the company's services have become commoditized, offered by other cloud providers that also provide a wider range of services. Dropbox laid off 315 people, or roughly 11% of its global workforce, back in January and said chief operating officer Olivia Nottebohm was stepping down. 

Last year, the company grew revenue by just 15% and reported a net loss, during a period when other cloud-based service providers were thriving.