Activist hedge fund Half Moon Capital is pressing cloud storage specialist Dropbox to dismantle its dual-class share structure, which currently grants CEO and co-founder Drew Houston a supermajority voting stake, according to a report by The Wall Street Journal.
The fund is challenging Dropbox’s governance model amid concerns over slowing revenue growth and its pricing strategy, arguing that the dual-class structure has insulated management from shareholder accountability following what it describes as “significant missteps.”
Half Moon Capital, which holds approximately 40,000 Dropbox shares – valued at around $1.1m – has proposed eliminating the structure, a move that would require majority shareholder approval. However, with Houston controlling roughly 77% of voting rights through Class B shares that carry 10 times the voting power of Class A shares, any change would need his backing.
While Half Moon is a relatively small hedge fund, its push could amplify broader investor concerns over governance at Dropbox. The fund believes that even if the proposal does not pass, it will increase pressure on management and the board to make other shareholder-friendly changes.
The activist campaign comes as Dropbox continues workforce reductions, with a 20% cut announced in October 2024 following a 16% layoff in 2023.
