Question

Is it true that moves that target more than one Pokémon deal less raw damage the more targets they hit?

Answer 1

In Generation III, if there is more than one target, moves that can hit both foes (but not moves that hit all Pokémon on the field, such as Earthquake) have their damage reduced by 50%. In subsequent games, if there is more than one target, any move that can hit multiple Pokémon has its damage reduced by 25%.

Yes, the damage is decreased.

Source

Comments

Ah, I wish I knew where to look for this information, I am still not so well-versed with how all moves work.

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