Many animals have ears that revolve and pivot when they hear noise. Humans have vestigial structures in their ears that allow them to wiggle their ears somewhat. How would elves achieve this same effect.
Go backwards just a few small steps in our evolutionary tree, and you will encounter the primate sub-order strepsirrhini, consisting of lemurs, galagos, and lorises. These are perhaps not our fiercest cousins, but arguably the cutest.
Relevant here is that these creatures all have the feline-like pinnae that allow for rotation to focus on the direction of a sound. If human and elvish evolution diverged at or near this point in the tree of life, it would be entirely plausible for the elf branch to retain this trait. Elves in fiction are often portrayed as having a pointed pinna; here we are taking it a bit more extreme.
In this sense, where a human might be a large, intelligent, bipedal ape, an elf is likewise a large, intelligent, bipedal lemur.
If I use the strict definition of "elf," then the answer must be no. Like humans, elves have ears on the sides of the head and the ears themselves are splayed out along the skull to capture sound in a hemispherical fashion. This gives us a tremendous advantage when it comes to triangulating sound from any source around us. However, our hearing is substantially weaker than creatures with cone-shaped ears.
Animals (like cats) with cone-shaped ears hear sound basically from only one direction: the direction the ears are pointing — but the cone shape captures sound better. Most such animals can rotate the ears to track sound, compensating somewhat for the lack of 360-degree tracking, but it's a much slower and less accurate process.
Remember that the shape of an elf's ear — the traditional pointy-eared elf — wouldn't actually give them improved hearing. The extra flesh is just that, extra flesh. We can stretch our ears today into marvelous shapes and it does nothing to our hearing.
Further, when you say "rotate" you must realize that so long as the ear isn't cone-shaped, there's nowhere for the rotation to go.
Let's assume elves had superior ear-wiggling muscle control such that they could pull the flesh behind the ear hole forward, turning the ear into a rudimentary cone-shaped ear akin to cupping your hands behind your ears. That would shift the ear from "tracking mode" to "sensitive mode," allowing them to hear better in the direction their nose was pointing. That's actually an interesting idea.
Many people don't know this, but the pointy part of elves ears is an attachment point for a set of tendons and sinew that also attach around the base of the ear.
This gives them a lot of control over the shape of their ear; by constricting the tendons, they can cup and curl their ears much more than humans...it even allows them to hear "around corners" when hiding behind rocks and trees which is part of the reason they are so stealthy.
Of course the first hand subjective experience of the elf is not of pulling tendons but "hearing that particular spot over there".
The actual muscular mechanics is similar to the way a monkeys' tail works.