Wall Street doesn't think using your friend's Netflix account is a problem

On July 15, Netflix reported that it gained 3.3 million new subscribers in Q2, sending the company's stock soaring.

Amid the good news, Wall Street continues to ask just how many people are sharing accounts between households.

The short answer? There's not nearly enough password sharing for Netflix to be concerned.

According to Citi's Mark May, a recent survey GlobalWebIndex Survey of 5,721 Netflix users in the United States and United Kingdom found that 65% of people watch on a shared account.

This includes 19% of users who have an account with 3 or more other people, as illustrated in the chart below from Citi:

While some are seeing this information as a big negative, May used the data to tell a different story: Password-sharing isn't really a problem for Netflix.

In a note to clients on Thursday, May broke down the numbers, using an estimated 45.6 million subscribers in the United States. With this number and the survey's percentages of each kind of account, May estimated the number of each kind of account in the United States.

May then multiplied that by the number of people who shared the account to gauge the actual number of Netflix users relative to subscribers in the United States.

Here's what he found:

• Users with 1 person accounts = 15.9 million
• Users with 2 person accounts = 27.3 million
• Users with 3 person accounts = 21.9 million
• Users with 4 or more person accounts = 34.6 million

Adding these numbers together, May estimates that there are actually 99.8 million Netflix users, compared to the just 45.6 million subscribers.

While this could mean 54.2 million people are freeloading off of friends of friends or their ex's, we need to first factor in legitimate household sharing.

Remember that Netflix allows sharing among family members. The average U.S. household has 3.1 members, which multiplied by Citi's estimate for Netflix subscribers means that about 143 million people in the United States are permitted to use a Netflix account.

This number is way larger than the actually 99.8 million Netflix users that May calculated, which means that not a lot of people are mooching others' Netflix accounts beyond their household.

"Since this number is greater than the computed 100mn user number from the survey results, it suggests that sharing beyond immediate/household users is likely limited and thus supports CEO Hastings' comments that password sharing is not a meaningful issue," May concluded.

So go ahead and enjoy Netflix's July lineup on someone else's account: Reed Hastings won't be coming after you.